Market Crash Outlook Alive, but Fading

10/18/2019 9:44 am EST

Focus: MARKETS

Susan Gidel

Editor, Red Letter Trading Days

A month ago, we noted that the S&P was setting up for a crash this week, but all the technicals have not lined up, writes Susan Gidel.

Last month we pointed out that the S&P 500 could set a pre-crash high on Oct. 4. It did but that was taken out weakening the crash scenario. Based on similar patterns in previous stock market crashes, only half of the astrological setup for a crash on Thursday, Oct. 24 exists this year. The transiting planet setup versus the S&P 500 launch horoscope from 1957 remains similar to transits from crashes in 1929, 1987 and 1997. However, this year’s price action hasn’t matched previous crash patterns that featured a last-chance-to-sell high near the prior first-quarter moon.

This year, that would have meant a high near the first-quarter moon of Oct. 5. Indeed, the market rallied to a high of 2953 on Friday, Oct. 4, a rally and level that looked unlikely given the 137-point drop from Tuesday through Thursday that hit a low of 2855, just 8 points below an important planetary price conversion level of 2863. But, that 2953 high was later surpassed as the market challenged the 3000 level this week, hitting a high of 3008 on Thursday, Oct. 17.

Just to be on the safe side, here’s a reminder of how stock market circuit breakers work across the equity, futures and options markets. During NYSE trading hours, a decline of 7% in the DJIA triggers a 15-minute trading halt at all exchanges. A 13% decline triggers another 15-minute halt. Finally, a 20% decline closes markets for the day. In overnight trading, a 5% drop would halt trading. Circuit-breakers were instituted after the Crash of 1987, when the stock market fell 21% in one day. However, they have been triggered just once — a 7% drop during the 1997 Asian financial crisis.

Monday, Oct. 21

  • High in Crude Oil: Both significant axes notable in previous crude oil highs are activated by transiting planets. First, the Sun is aligned with the first-trade Mars/Pluto opposition while the Moon is at a 90-degree angle. With the Moon in Cancer, this portends an emotion-filled trading session. Second, transiting Mars is opposite the first-trade Sun and Mercury. A third first-trade planet, Venus, also is in play with transiting Venus opposite and transiting Saturn in an easy relationship that could restrict prices. Nearby resistance levels stemming from planetary price conversion exist at $56.80 per barrel and $57.20.

Thursday, Oct. 24

  • High in Gold: Mercury and Venus in the sky are connecting with their counterparts in gold’s first-trade horoscope in a pleasant way that could provide a lift to prices. That is supported by the Sun having just entered a new zodiac sign, Scorpio, which also makes it aligned with the planet of change, Uranus, in gold’s natal chart. Planetary price conversion resistance comes in at $1,508 per oz., then $1,545 and $1,573-$1,581 in the December contract. 
  • Low in S&P 500: Today marks the 27th day of the 7th lunar month, the same day as market crashes in 1929, 1987 and 1997. In addition, the transiting planets make similar connections to the S&P 500 launch horoscope as they did in those crash years: (1) transiting Sun conjunct first-trade Neptune; (2) transiting Mars opposite first-trade Moon; and (3) transiting Moon opposite first-trade Sun. In addition, the transiting Sun is at 00 Scorpio and trine the index’s first-trade Venus. From S&P 3000, these are the circuit-breaker percentages in points, with nearby planetary price conversions in parenthesis:
    • -5% (overnight) = 150 points = 2850 (2850, 2853, 2863)
    • -7% = 210 points = 2790 (2774)
    • -13% = 390 points = 2610 (2584)
    • -20% = 600 points = 2400 (2404)

Last Week’s Scorecard (through Thursday’s close)

Pretty Darn Good

  • Low in Gold on Wednesday, Oct. 16: December gold made a low $1,480.60 per oz., rallying nearly $20 to Thursday’s high of $1501.10.

Pretty Darn Good and Off the Mark

  • High in S&P 500 on Thursday, Oct. 10: It was pretty darn good that the S&P 500 rallied to 2948 and fell back from important planetary price conversion resistance at 2944, closing at 2938. However, it was off the mark when it jumped over 2944 the next day, ultimately rallying to 3008.29 on Oct. 17.  

Off the Mark

  • Low in Soybeans on Tuesday, Oct. 15: This was more of a high than a low, coming one day after a peak in November beans at $9.45 ½ per bu. November beans made a low of  $9.27 ¼ on Thursday, Oct. 17.

The position of planets in the sky as they relate to their positions when a market first began trading can provide clues to potential trend changes. The energy is strongest on the days noted in this post, but it is not unusual for the effect to be seen a day or two either side. See backgrounder “Market Analysis with Astrology” for further information. 

Susan Gidel is editor of the Red Letter Trading Days newsletter.

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