Stocks & Commodities V. 31:13 (38-40): Lunar Cycles And Stock Market Volatility by Ron McEwan

Lunar Cycles And Stock Market Volatility by Ron McEwan

New Moon Mania

Have you ever objectively analyzed the data of lunar cycles and its relationship with the financial markets? Here is one method that could bring some value to your trading.

If you were to do a web search for “lunar cycles finance,” you would get approximately 4.65 million hits. You can see that a number of people have thought about this topic enough to tweet, blog, or write a paper about it. Yet how many of you have plugged this data into a spreadsheet or programmed the function into charting software to find out whether this is the holy grail of trading or just an old wives’ tale? Maybe you were once bold enough to mention to your trading desk manager that “it’s a new moon, so we should short the SPOOZ!” You may be at the unemployment office even now.

But wait, it works!

There seems to be a great deal of interest in this topic but not that much conversation about it around the trading desk. Some of you may have tried this and sorted through numerous equity, foreign exchange, and even commodities data series. As hard as you tried, it just did not play out. Sometimes the charts looked almost prescient, then poof! the nicely fitted cycle just evaporated.

Is there something to this that some basic instinct is telling us is valid? It should either work or be dismissed as a useless trading tool.

When properly used, it is a valuable trading tool. What if we are just not applying this in an appropriate manner? What if it’s us? Essayist Ronald Wright mentioned in one of his lecture series that “we are trying to run 21st-century software on 50,000-year-old hardware.” I wanted to see if this relationship were functioning on a more basic emotional part of our hardware. Maybe it is something more primitive.