V.10:4 (169-172): Trading Planetary Eclipses by Hans Hannula, Ph.D., C.T.A.

Trading Planetary Eclipses by Hans Hannula, Ph.D., C.T.A.

Stock market lore has long been filled with claims that planetary motion affects stock and commodity prices. As most market students who pursue this topic find out, however, many rules and explanations of what causes tops and bottoms in markets contradict each other about which planets are important and what could cause these effects. There are relationships, but they differ from what one might find in the literature of financial astrology. Hans Hannula explains.

In financial astrology, the angles formed between two planets as viewed from the Earth have either bullish or bearish implications for the market. In astrological jargon, these angles are called aspects. The angles are measured from a line drawn from the Earth to the sun. When a planet is aligned with the sun, it is said to be in geocentric (Earth-based) conjunction, or at zero degrees. If the planet is between the Earth and the sun, it is called an "inferior" conjunction. When a planet is positioned so that the Earth is directly between it and the sun, it is said to be in geocentric opposition, or at 180 degrees. Similarly, if the planet is at 90 degrees to the Earth-sun line, the planets are said to be square. Squares are supposedly bearish. Conjunctions and oppositions are supposedly positive.

But this interpretation is not universally accepted. David Williams, author of Financial Astrology, uses an aspect-scoring system in which he attributes bullish or bearish influences to each aspect according to which two planets are involved. For example, he considers the conjunction of Mercury and Earth positive, but that of Mars and Earth negative. Even with this difficulty, however, financial astrologers have used aspect rule-based systems to predict stock movements with enough success that they are still widely followed.

Personal computers have spawned renewed interest in using this approach for trading. First, compute the time of each aspect between each pair of planets and measure the change in market price some time later. If prices are up or down over some threshold, say 70% of the cases, record the aspect as bullish or bearish. If it is under the threshold, consider it insignificant. This gives a scoring table for the aspects.