22 September 2018 Volume 11, Issue 39. Summary for week of 24 September 2018

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1 22 September 2018 Volume 11, Issue 39 Summary for week of 24 September 2018 Stocks look bearish this week Dollar may be weak early but stronger after FOMC Crude oil looks bearish this week Gold vulnerable to declines; possible double bottom US Stocks Stocks were mixed last week as trade worries ebbed amid fresh concerns about the tech sector. The Dow was the strongest of the major indexes as it rose by 2% on the week to a new all-time high of 26,743. The S&P 500 was higher by 1% to 2929 while the Nasdaq- 100 finished marginally lower. This mostly bullish outcome was surprising as I thought the bears could have done more damage, especially on Wednesday and Thursday. But that view proved mistaken as stocks generally rose after Monday s anticipated pullback. It was a frustrating week. While I thought new ATHs at 2920 or above were quite possible, I did not think there was enough bullish energy for the week to close at those lofty levels. Once again, the bull market has revealed its enduring strength. Could things change now? It s possible, especially with a FOMC statement due this Wednesday Sep 26 th. The market is widely expecting (93%) the Fed to hike rates with the odds of another hike in the December meeting at 78%. With higher rates already priced in, it will be up to the forward guidance to give the market hints about the outlook for A steep rise in rates would still be bearish for equities, so any language that

2 talks about inflation pressures and the like will be watched carefully. I would think Fed Chair Jay Powell knows how to talk to the markets by now although he may tip his hand about the possible negative implications of Trump s tariffs. The astrological outlook still suggests additional pullbacks are more likely than not in the near term. I had previously expectedly the second half of September to be generally negative with a probable pullback to the 50 DMA at 2857 at least. Last week threw a wrench into that expectation, although I would still lean bearish for this week upcoming. How much damage the bears can do is hard to say though, although the alignments do look pretty bad. Of course, I said that about last week and we only got one down day out of a possible two or three. Nonetheless, I think there is a reservoir of negative sentiment here that has to manifest very soon, and most probably this week. Next week the first week of October -- looks less negative although there are some sources of uncertainty there with the Venus retrograde station on Friday the 5th. The technical outlook looks very clearly bullish. The new all-time highs for the Dow and the S&P 500 give the bulls a lot of breathing room now in the event of any pullback. The Dow is now forming a double top so that could open up the possibility of a pullback, even if it is not a particularly large one. The SPX is pushing up against channel resistance dating from April so some kind of pullback is very likely in any event in the coming days. Friday s new high and negative closing was a plausible reversal candle that may have signaled more downside to come this week. Initial support is in the range (the 20 DMA is 2897) and below that the previous high of would likely bring in new buyers in the event of a pullback. In other words, the prospects for a major retracement do not look great right here from a technical perspective. And yet, the planetary perspective suggests the chances for a larger pullback is perhaps better than the technicals would suggest. Actually, the NDX and Russell 2000 look more primed for a pullback than the SPX. Apple and Amazon are struggling to make higher highs. The NDX rejected horizontal resistance at 7600 and may now test its 50 DMA once again. This line has held up well as support in past weeks. But a break below the 50 DMA would force many investors to reassess their positions and could spark a larger sell-off. The Russell 2000 is also bouncing off its 50 DMA but has yet to follow through higher. Another retest of its 50 DMA in the coming days may be more troublesome. The weekly Dow chart has stochastics sitting at 99 thus making further upside a fairly marginal proposition in the near term.

3 Momentum players can continue to ride the market higher perhaps but it is not a great time for medium or long term investors to commit new money on the long side. The other major development last week was the rise in yields towards their May high. The 10-year reached 3.1% on Thursday before pulling back a bit on Friday. A move above 3.12% could begin an unpredictable rise in rates going forward. This could be very damaging to bonds and companies with heavy debt loads. It seems unlikely that the Fed wants rates to rise into this unknown upper region so it may have to remove liquidity in order to push more money into bonds and out of equities. Let s see what Powell says on Wednesday. This week leans bearish again. The fact that stocks actually finished higher last week increases the chances for declines this week. Monday looks bearish on the Mercury alignment with Mars and the Lunar Node and the Sun s alignment with Saturn. This simultaneous alignment of negative aspects should not only increase the probability of a decline but also increase its potential magnitude. A decline of 1% or more looks quite doable although bulls have been so strong recently, I would remain a bit skeptical about any big downside here. Tuesday looks a bit less bearish although overall it could see more selling as the Sun aligns with Saturn, Mars and the Lunar Node. It s definitely more bearish than bullish. Wednesday is FOMC day just as Mars conjoins the Lunar Nodes and aligns with the Sun. This is also not positive although I would keep an open mind about how the market may react. Thursday looks more bearish in that sense as the Moon aligns with the Moon in the morning. Perhaps there will be a rebound in the afternoon. Friday leans more bullish as the Moon aligns with Jupiter. Overall, there is a good chance for a negative week and a test of the 20 DMA at 2897 is very likely indeed. I think we could see a test of the 50 DMA at 2857 as well. Next week (Oct 1-5) is more of a question mark. It is possible the pullback could extend into a second week here but the planets are not clear. Monday looks somewhat bearish on the Moon-Saturn opposition while Wednesday s Moon-Lunar Node alignment also could give bears some extra energy. But the late week Venus retrograde station looks bullish and does not present a strong case for a second big down week here. The following week (Oct 8-12) actually looks more bearish as Mars is square Venus in the first half of the week. Lower lows are possible although I would be reluctant to say probable. Jupiter enters Scorpio later in the week so that should generate a rebound on Oct 11 or 12. I think October could see more gains and they could well last into early November. Depending on how deep the pullback is in late Sep/early Oct, we could easily see higher highs in November (3000?). That said, I would caution bulls that there is likely going to be another significant

4 pullback in Q4, probably starting in mid-november although the exact timing remains is less clear. I do think it will last for at least 2-3 weeks and will likely last into December. At this point, I would be reluctant to forecast a lower low, especially since that would be very technically significant in terms of the overall health of the bull market. A strong rebound is likely to begin in late December or early January and Q1 looks mostly bullish. The market will likely take a significantly bearish turn by Q as Saturn aligns with the Lunar Nodes and Pluto. This is a very negative alignment which will likely end the bull market since declines are likely to continue into the summer. Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) SPX (1 week ending Sep 28) Medium term trend is UP bullish (confirming) SPX (1 month ending Oct 28) Long term trend is UP bearish (disconfirming) SPX (1 year ending Sep 2019) Indian Stocks Stocks fell sharply last week as rising yields wreaked havoc on companies with high debt loads. The Sensex lost more than 3% on the week to 36,841 while the Nifty finished at 11,143. This bearish outcome was in keeping with expectations as I thought the Mars-Ketu- Saturn alignment would likely coincide with some significant down days. While the early week was bearish as expected, I did not account for Friday s decline. The correction is now well underway. The fundamentals look shaky as we head into another Fed meeting this Wednesday the 26th. More hawkish talk from Jay Powell could make things worse for the rupee and for Dalal St as liquidity flows out of India. US rates are also pushing higher as the 10-year matched its 2018 high of 3.1% last week. Any further gains would take yields into uncharted territory and could spark a mass exodus from the bond market. This could have further

5 repercussions globally as emerging economies would have to ratchet up their rates in tandem. Higher rates will make loans less affordable and that could rein in growth significantly. The astrological outlook remains difficult. The ongoing bearish alignment of Mars-Saturn-Ketu-Uranus looks like it could continue to have negative effects on sentiment for another week or two at least. Mars is due to conjoin Ketu this week so I would tend to think more downside is likely, at least to retest Friday s piercing low. October could see a bounce, but there will be a Mars-Venus square in the second week of October which also threatens to bring some downside. Whether or not this is a lower low is unclear but it will likely postpone a significant recovery until the middle of October. The technical outlook is suddenly not so bullish. Support at 11,300 was tested and broken last week which suggested the bears are gaining strength. And Friday s shocking break below the key 11,171 level also should strike fear into the bulls. However, the recovery after the intraday low was impressive and the Nifty ended the week just slightly below that aforementioned breakout level of 11,171. Bulls could build on the upward momentum in the next few sessions if they can push the Nifty back above 11,300 and the 50 DMA at 11,342. However, any hesitation would likely be met by more selling. A retest of Friday s low of 10,866 is therefore very possible all things considered and that is not far from the 200 DMA at 10,748. The daily chart still has room to fall before becoming oversold by the RSI (=37). The current pullback is much larger than previous pullbacks this week as the initial move outside of the lower Bollinger band saw a failed bounce which rejected the 20 DMA (middle band). After that rejection, we have seen a second leg lower and another close outside the lower band. The weekly BSE chart shows the weekly close just above the middle band and hence there is a plausible case for a bounce in the near term. And yet, the bearish crossover in stochastics is well in hand and there is further room to fall before becoming oversold on the weekly chart. More ominously, MACD is only starting its bearish crossover. Meanwhile, few stocks escaped the carnage including Infosys. However, it is worth nothing that Friday s test of support at the 50 DMA did create a reasonable entry point for bulls. We will see how far they can take the ball. HDFC Bank also fell sharply although it too bounced off support, this time off its 250 DMA (50 WMA). This is the first touch of the 50 WMA since late 2016 and offers a solid buying opportunity at least in the short term. It remains to be seen how long the bounce will last. But its

6 market leadership should give bulls hope that a lasting rebound is possible from here, even if the index charts are less persuasive on that score. In other words, bears should not be over-confident. This week also looks bearish. Monday and Tuesday could see declines as Mercury aligns with Ketu and the Sun aligns with Saturn. Tuesday actually looks more bearish than Monday. I would not rule out a bounce on Monday as the Moon aligns with Jupiter in the morning but the planets really don t look very promising. That could mean that early gains may be in jeopardy by the close on Monday. If it turns out that Monday is higher, then that would increase the likelihood of a significant decline on Tuesday. The indications for Wednesday are unclear so an up day is possible then. But the planets through the week look negative and could produce down days at any time. Thursday s Moon-Mars square looks negative so this perhaps may be a reaction to the Fed meeting on Wednesday. Friday looks more bullish as the Moon aligns with Jupiter. Overall, the week looks bearish and we could see a retest of 10,866 at some point. While some up days are likely, I don t think gains will prevail by Friday. Next week (Oct 1-5) looks more mixed. The early week could see a bounce as the Moon aligns with the Sun and Venus on Tuesday. There is some risk for more downside on Wednesday and especially Thursday on the Moon-Mars opposition. Friday looks bullish. If the preceding week has seen a retest of support (e.g. 10,866; 10,734) then we could get a decent bounce here. The following week (Oct 8-12) features a Mars-Venus square which could reflect some weakness in sentiment. Perhaps this creates a higher low from which the market will attempt to rally. Jupiter enters Scorpio on Oct 12 th so there is a plausible case for some gains for the rest of October. Higher highs in November look unlikely at this point, although we should wait and see how the rest of the current correction plays out. The market is likely to undergo another pullback in November and this could extend into early December. Bulls will likely have another chance to rally starting in December and continuing into January. The bulls will likely re-establish control of the market in early 2019 and the outlook is generally bullish until about April or May. A major correction is likely after that and could end the bull market. Overall, 2019 looks bearish.

7 Technical Trends Astrological Indicators Target Range Short term trend is DOWN bearish (confirming) 10,800-11,300 (1 week ending 28 Sep) Medium term trend is DOWN bullish (disconfirming) 11,300-11,700 (1 month ending 28 Oct) Long term trend is UP bullish (confirming) 11,000-12,000 (1 year ending Sep 2019) Currencies The Dollar declined last week on concerns that there would be no quick trade deal with Canada. The USDX lost a full cent on the week to while the Euro settled at This bearish outcome was in keeping with expectations as I thought the Mars-Saturn alignment would finally have an impact. I think this pullback may have a bit further to go in the short term. Technically, the breakdown of support at 94.5 was significant. There is secondary support here at 93.5 although it may not take much for a retest of the 200 DMA at Friday s bounce at 93.5 was a possible sign that some bulls hope the low is in for now but it remains to be seen if 94.5 will now act as resistance. Cautious bulls may be waiting for lower lows or at least a retest of 93.5 before going long. Caution may be warranted given last week s bearish crossover of the 20 and 50 DMA. The measured move downside target is 93 based on the size of the decline off the August high. The weekly Euro chart paints a similarly vague picture as resistance at 1.18 looms large. And yet bulls may be seeing a replay of the late 2017 pattern which first saw a tag of the long term 200 WMA and then a bounce to resistance, followed by a bigger move higher. If resistance is broken at 1.18, then the upside target would be in the 1.23 area. This week looks mixed. I think there is a heightened risk of some further downside but I am less sure if the week will be negative overall. The reaction to the Fed looks more likely to push the Dollar higher on Wednesday afternoon and, more likely, on Thursday given the Mars-Moon alignment. So we could see a retest of last week s low of 93.5 earlier in the week. Bears should not feel complacent here,

8 however, since there is a chance that much of the decline has already occurred. I think there is likely to be another move lower in the Dollar soon, but it could take some time. Next week could see some gains as Venus turns retrograde, especially in the first half of the week. October looks mixed so I do not see any clear indications for a major new rally. There is likely to be another pullback in the coming weeks, probably at the end of October or beginning of November. At this point, I would not expect a significant correction. It seems likely that the greenback will be range bound through most of Q4. Another rally looks more likely starting in December and January although I would not expect the rally to last too long. Q2 looks choppy, for example. There is the prospect for a stronger rally next summer. Longer term, the outlook is more bearish for the rest of 2019 and Technical Trends (Dollar) Astrological Indicators Target Range Short term trend is DOWN bullish (disconfirming) (1 week ending Sep 28) Medium term trend is DOWN bullish (disconfirming) (1 month ending Oct 28) Long term trend is DOWN bullish (disconfirming) (1 year ending Sep 2019)

9 Crude oil Crude oil was generally higher last week as the Dollar weakened and OPEC talked about boosting output. WTI gained 2% on the week to $70.78 while Brent was only up fractionally to $ This bullish outcome was surprising as I thought the bears would be stronger given the ongoing Mars-Lunar Node conjunction. My general view is that we should still see some weakness over the next weeks or two. And yet September has been surprisingly bullish thus far so bears should not expect too much in the near term. The technical outlook is still fairly positive. Bulls did manage to take WTI above resistance at $70. Despite the move higher, we can see a rising wedge forming over the past weeks which could end up breaking down. Key support is near the 20 DMA at $69. If that breaks, then we could see a retest of the previous low of $67. As before, the head and shoulders pattern remains a bearish possibility in the event that the left shoulder high of $73 is not broken. Bulls may be seeing the inverse head and shoulders pattern as judged from the August low of $65. This pattern has an upside target of $75 as long as price stays above neckline resistance at $70. Overall, there are very plausible interpretations for both bulls and bears. The weekly Brent chart shows the repeated tests of resistance at $80. One would think that the more this level is tested, the more likely it is to be broken. This is even more likely since we have seen a series of higher lows in recent weeks. The medium term technical outlook for crude does look fairly bullish. This week offers the bears another chance. The early week could see some weakness on the Sun-Saturn square. Tuesday looks a bit more bearish than Monday in this respect although both days have elevated downside risks. The late week also could see some selling, especially if the Dollar gets a boost from the Fed on Wednesday. The Mars-Node conjunction is exact on Thursday so that could see more downside. While I think the planets do favour the bears this week, I will admit to a lack of certainty after last week s misfire. So perhaps some of the patterns I am seeing are not as bearish as they look. Nonetheless, bulls should be cautious here. Next week (Oct 1-5) looks mixed with a possible upside bias. A bounce is more likely here if the preceding week has been bearish. The following week looks less bullish, however, as Mars squares Venus. I think there is the possibility of more weakness in October, but I suspect it may occur in the

10 second half of the month and then continue into November. It is possible we could see prices chop around in October and November without clear direction. The planetary indications look mixed in that respect and do not provide clear direction. I think the prospects for a stronger rally are better starting in December and January when Jupiter aligns again with Neptune and Pluto. Crude may continue to be mostly bullish in the first half of 2019 although a significant correction looks likely by May or June as Saturn aligns with Pluto and the Lunar Nodes for the summer. Technical Trends Astrological Indicators Target Range (WTI) Short term trend is UP bearish (disconfirming) $64-68 (1 week ending 28 Sep) Medium term trend is UP bullish (confirming) $64-72 (1 month ending 28 Oct) Long term trend is UP bullish (confirming) $70-85 (1 year ending Sep 2019)

11 Gold Gold was unchanged again last week despite weakness in the US Dollar. After trading as high as 1215, gold finished Friday again at This neutral outcome was unexpected as I thought we would have seen more downside. I think there is additional downside risk this week upcoming but we could see gold bounce fairly soon thereafter. The technicals are looking more positive in that respect as a tradeable bottom is forming beneath resistance at 1220 and the 50 DMA. A daily close above these levels would be a fairly significant buy signal and we could see gold move sharply higher. We can now see that the 20 DMA is about to cross over the 50 DMA and this will likely produce another buy signal. A test of the 200 DMA at 1285 would be a possible target of such a bounce. Of course, a sharp move higher would not necessarily end the bear market in gold as prices are still very depressed following its 2011 high. Gold have may have to move above its previous trading range of in order to generate more interest in a longer term bull market. For now, the question is whether gold will rally off current levels or will there first be a hard retest of the August low of Both scenarios are reasonable although I suspect there may be a shake-out first before a big move higher takes place. Therefore, we could see a move down to 1180 at least, if not 1167 and maybe even a bit below that level just to keep bulls guessing. This will set up a double bottom which will likely be bought fairly aggressively. This week again gives the bears a shot. The early week Sun-Saturn square has a bearish bias and could take prices lower. I would expect some downside on either Monday or Tuesday from this pattern. The Fed issues its latest statement on Wednesday so that could also be a market mover. Thursday s Mars- Moon square looks bearish and argues for more downside. Friday s Moon-Jupiter aspect looks more bullish, especially if we have seen some selling on Thursday. I would lean bearish overall this week with a possibility that we get that double bottom (1167) at some point. Next week (Oct 1-5) looks more bullish as Venus turns retrograde on the 5 th. Monday looks bearish on the Moon-Saturn aspect but we could see the situation become more bullish as the week progresses. The following week (Oct 8-12) is harder to call. The Venus-Mars square looks bearish but Jupiter enters Scorpio late in the week. This could offset any early week negativity perhaps although I am uncertain

12 where the week will end up. October generally looks fairly bullish so the expectation of a rebound seems justified given the planetary situation. We could see gold move higher into November so there is a decent chance for that test of the 200 DMA at some point. A retracement is likely in late November and December, however. It is difficult to say if this retracement will significantly undermine the preceding rally or if it will merely be a normal retracement to a higher low. I would lean bullish for Q so that suggests the pullback in Nov-Dec will be to a higher low which precedes the next leg higher in the rally. A significant correction is likely in Q2 and Q3 but gold will likely resume its upward climb thereafter. Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) (1 week ending Sep 28) Medium term trend is DOWN bullish (disconfirming) (1 month ending Oct 28) Long term trend is DOWN bearish (confirming) (1 year ending Sep 2019) Disclaimer: For educational purposes only. The MVA Investor Newsletter does not make recommendations for buying or selling any securities. Any losses that may result from trading are therefore the result of your own decisions. Financial astrology is best used in conjunction with other investment approaches. Before investing, please consult with a professional financial advisor Christopher Kevill