23 February 2019 Volume 12, Issue 9. Summary for week of 25 February 2019

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1 23 February 2019 Volume 12, Issue 9 Summary for week of 25 February 2019 Stocks with elevated downside risk, esp. later in week Dollar could bounce higher this week Crude oil more vulnerable to declines Gold mixed with greater downside risk US Stocks Stocks were higher for a 9 th straight week last week on more dovish Fed jaw-boning and optimism that the China trade deal will get done in March. The Dow rose less than 1% to 26,031 while the S&P 500 finished the week at This bullish outcome was unexpected as I thought we might have seen more downside given Tuesday s Full Moon. That said, I did not have high confidence on a losing week as the underlying bullish sentiment has been relentless. Markets have enthusiastically welcomed the Fed s promise to hold rates steady this year. And several Fed governors are now suggesting that the unwinding of its balance sheet may not continue if the economy shows further signs of weakness. The return a loose monetary policy has been very bullish for stocks, but it is unclear how the market will respond when the economic data shows more slowing. The Fed is ending its quantitative tightening (QT) because of the rising possibility of a recession later this year or next. But if economic growth stalls or goes negative, one would think stocks will sell off anyway no matter what the Fed does. Of course, many observers note that the Fed does not lead policy

2 but rather simply reflects what the bond market is already doing. This is what led to their policy reversal in January as bond yields fell sharply through Q4. Ultimately, the bond market may well have the final say as yields are still trending lower in anticipation of declining growth. This isn t bullish for stocks in the medium term although further upside is possible in the short term. The planetary outlook still offers some support for the current bullish consensus view. The upcoming Jupiter influences in March and April should translate into more upside for stocks. While it is difficult to say if there is enough bullish energy for new ATHs above 2940, there is some reason to think we won t get a sudden reversal lower to retest the December lows anytime soon. More immediately, there is a likelihood of a pullback in the coming days but I think this is unlikely to inflict significant technical damage upon this V-shaped rally. The size of this rebound alone still presents a formidable argument for dip buyers. The planets would tend to agree with this bullish assumption. The technical outlook is bullish. Last week s gain brought the SPX right up to the next level of key resistance at This level has marked previous interim highs and it is widely expected to coincide with at least a small consolidation phase before possibly continuing higher. While stocks are looking overbought here (RSI=69), the strong breadth in this rebound rally is not showing any signs of flagging. The Advance-Decline line is well above its level in September, as is the Bullish Percentage Index. Moreover, the BPSPX rise is following a clear trend line higher. Until that trend line is broken, there will be no significant pullback. Horizontal resistance is so a reversal lower becomes more likely if we see the SPX enter that zone. But we also cannot rule out the possibility that stocks could simply continue rising, such as on some very good news. This could trigger a lot of the bears sell stops and produce a quick rise above As before, key support is likely near the rising trend line which is also very close to the 10 DMA at This is now a bit above the 200 DMA at 2746 so that area may well act as decent support in the event we get a pullback this week. If that line breaks, then the next support level may be Below that, the 50 DMA near 2625 could be a logical area for bulls to re-enter long positions. I tend to think that any pullback we see in the next two weeks will not get far so either of those levels is a possible downside target. The weekly Dow chart still looks bullish. Stochastics is now overbought so any move back below the 80 line in a bearish crossover could signal another correction. While the chart argues for more upside, bears may be thinking about the chart in terms of a very rough head and shoulders top

3 forming. We are fast approaching the possible left shoulder Jan 2018 high of 26,616 so that could set up a right shoulder if we get any more upside. But the Dec low was lower than the Q low so it seems unlikely that this pattern could play out. Nonetheless, it underscores the potential problem for bulls if the Dow cannot make a higher high above 26,951. The yield on the 10-year was unchanged last week but remains in a down trend. A retest of the January low of 2.55% is quite possible here and that would not be bullish for stocks. This week leans bearish. Of course, previous weeks in February have also contained some bearish influences but they have been overwhelmed by bullish patterns. That said, the influences this week seem a bit more reliably bearish. This is still not what I would call a high probability negative outcome for the week since the early week could be bullish. Monday s Venus-Lunar Node alignment is somewhat unpredictable but I would favor a bullish outcome here. Bears should therefore be careful since it seems likely that horizontal resistance at will be tested. Whether or not the SPX can climb above 2820 is harder to say, although I would tend to think it won t. The bears best chance looks to be Friday and the Moon-Saturn conjunction. Declines are also possible on Wednesday and Thursday although the indications are less strong. Next week looks more bearish so even if this week turns out to be more of the same with the SPX still trading above its 10 DMA, the dip is likely still to come. Next week (Mar 4-8) does look more bearish as Mercury turns retrograde. This will create a more negative tone due to the alignment with the Lunar Nodes, Mars and Uranus. The second half of the week looks more bearish in this respect, although declines are still very possible early in the week. I think there is a good chance that the 10 DMA will finally break down here (if not in the previous week) and we get a significant pullback. It is difficult to guess targets, but I will think anywhere between 2620 and 2700 is plausible. (This assumes that the SPX has previously topped out at ) The following week (Mar 11-15) looks quite bullish as the Sun aligns with Jupiter and Pluto. If the preceding week has been bearish, then this rebound could be quite strong. The second half of March may have a bullish bias which extends until April 10 th at least and the Jupiter retrograde station. My current view is that this probable April high will be somewhere above the February high (i.e. above 2800) and could also be close to old ATH at This view could change depending on how the rest of March plays out. I would expect another significant pullback to begin in the second half of April and continue into May. This could be a 5-10% decline, although that is very

4 much a guess. After a bounce to a likely lower high in early June, a larger decline looks likely for the rest of June and into July. This could well deliver that long-awaited retest of the Dec low at Another move lower is likely in August/September so we may well see lower lows (2100?) by early Q4. Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) SPX (1 week ending Mar 1) Medium term trend is UP bullish (confirming) SPX (1 month ending Apr 1) Long term trend is UP bearish (disconfirming) SPX (1 year ending Mar 2020)

5 Indian Stocks Stocks finished modestly higher this week on US-China trade hopes and signs of improved economic growth. The Sensex gained just 62 points to 35,871 while the Nifty ended the week at 10,791. This bullish outcome was not unexpected as I had been fairly neutral about where the week would finish. As forecast, we did see some selling early on and then buyers moved in on the Mercury-Venus-Jupiter alignment later in the week. The bullish trend remains intact as investors are seeing the economic glass as half-full. The default view is that Modi seems more likely than not to return to power, even if developments could quickly upset that view. Central banks have all resumed a dovish stance and are either actively stimulating (China) or winding down their tightening plans (ECB, Fed). While greater liquidity is always bullish, the reason why central banks are loosening is because growth is slowing. Bond yields have been falling throughout the world as investors reduce their inflation expectations and seek safe havens in the event of a recession. If a recession narrative takes greater hold in the months ahead, there is almost certain to be some further declines in equities, no matter how central banks intervene. The planetary outlook is fairly bullish over the next several weeks. The influence of Jupiter is likely to be largely positive until its retrograde station on 10 th April. This suggests that even if we get some further downside here and there, pullbacks may be fairly modest. I do think more downside is likely over the next two weeks or so as Venus conjoins Ketu this week upcoming and then Mercury turns retrograde next week on 5 th March. I m uncertain how much downside we could get from these patterns but I would nonetheless expect a fairly quick recovery in March as Jupiter aligns with Pluto and the Sun. The larger question is what may happen after Jupiter starts to lose strength after 10 April. My medium term outlook is still quite bearish although the exact timing of the next major decline is still uncertain. My working hypothesis now is that we will see some kind of interim top in April and then a two- or even three-stage correction in Q2. The first leg down could be in late April and early May with the second and much larger leg lower in June and July.

6 The technical outlook is still somewhat bullish. Last week s test of support at 10,600 confirmed the likelihood of the up trend, even if bulls could not push the week above the middle Bollinger band (20 DMA). It will therefore be doubly important that we get a move above the 20 DMA at 10,807 or else the market could become skittish. The convergence of moving averages at 10,800 highlights that level as the key battlefield between bulls and bears. Bulls barely managed a close at that contested zone and will try for a weekly close above it this week. If bulls cannot get a quick daily close above the 200 DMA at 10,860, there will be a greater downside risk of another test of support at 10,600. Of course, there is no guarantee it will hold again, especially without a preceding test of resistance at 11,000 as has been the case in the past. A breakdown below 10,600 would generate some significant selling, although we could see another retest of 10,000 in the worst case scenario. Conversely, a breakout above 11,100 would likely see the rally go to 11,400 in short order as bulls would then have a good chance of retesting the ATH at 11,760. The weekly Sensex is looking a bit vulnerable here as the bearish crossover in stochastics deepens. Last week s close was well off the lows at least and shows that bulls are far from giving up. It may be that a retest of the lower Bollinger band at 34,000 is needed before another test of the ATH can be attempted. Meanwhile, Tata Motors continued its gradual rebound back to retest resistance at the 50 DMA. The chart is still bearish over the medium term but a close deeper in the previous trading range of could be an important step in forming a durable bottom. ICICI Bank enjoyed a positive week as bulls attempt to recapture the 50 DMA. The chart suggests more upside in the near term until it encounters more overhead resistance at 370. But the medium term is less promising as the larger pattern resembles a head and shoulders top with a neckline at This week looks mixed. I am uncertain where the market is likely to finish. I do think there is a significant risk of a retest of last week s low of 10,600 in the next two weeks and it could easily occur this week. And yet, the early week has a bullish lean to it given the Venus-Mercury alignment so that could mean stocks go up before they go down again. Monday looks more bullish than Tuesday in

7 this respect. Tuesday leans a bit bearish given the Venus-Ketu conjunction and the Mars-Moon aspect. Wednesday s Moon-Jupiter conjunction hints at a possible up day although the influence is not strong. Thursday could go either way but Friday looks more bearish as the Moon conjoins Saturn and Mars forms a minor alignment with Rahu. Since next week is more likely to be negative, any gains we may see this week should be seen as being more fragile and temporary. Bulls should be cautious here. Next week (Mar 4-8) looks more bearish. Mercury turns retrograde on Tuesday 5 March just as it is part of a complex alignment of Mars, Uranus and Rahu. Some early week gains are still possible, although I would not say they have a high probability, nor are they likely to be large gains. The second half of the week looks more bearish and should produce at least one large >1% down day, and possibly two. With this significant downside risk, there is a very real chance that key support at 10,600 will not hold here, depending on what happens in the preceding week. I would lean towards a breakdown of support as the most likely outcome, although if the preceding week has been bullish, then we may simply get another retest of the lower end of the recent trading range. Stocks should rally strongly in the following week (Mar 11-15) as the Sun aligns with Jupiter and Pluto. I am expecting the rest of March to have a bullish bias and the gains could well extend into April. The period from mid-april to mid-may looks choppy and so it is likely a significant high will sometime in April or May. After Saturn turns retrograde on 30 April, the downside risk will increase significantly. I am expecting the largest declines to occur in June and July. Regardless of the level of the interim high in April/May, this correction could well involve another test of the 10,000. And if we have seen a lower high in April/May (11,400?), then a break below 10,000 is possible. We should see a large rebound in July/August, but another major decline is very likely in September/October. A lower low (9300?) is possible depending on the strength of the preceding bounce. Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) 10,500-10,900 (1 week ending 1 March) Medium term trend is UP bullish (confirming) 10,900-11,200 (1 month ending 1 April) Long term trend is UP bearish (disconfirming) 9,000-10,000 (1 year ending Mar 2020)

8 Currencies The Dollar slipped last week on slowing economic data and more dovish talk from the Fed. The USDX lost a half a cent to while the Euro settled Friday at This bearish outcome was somewhat unexpected although the early week did see the lion s share of the decline as forecast. The late week recovery was modest as the Dollar bounced off key support at This is the level of convergence of the 50 and 200 DMA and will likely hold up for a while yet. The level is also support from the double bottom pattern as it matches the late January high. If it holds here, then bulls still have a reasonable hope that the upside target of 98 can play out. Channel resistance is very close to 98 in any event so that modest target may be the best bulls can expect in the near term. The weekly Euro chart shows the narrowing range which may be a precursor to a big breakout in either direction. The falling wedge pattern tilts the odds in favour of a Euro rally sometime in the future. A weekly close above 1.15 would be the first step in that direction. And we have seen a bullish-looking double bottom in November and February at If there is a move above 1.15, the upside target of this pattern would be close to This week could see some upside. I think the Dollar is likely to reverse lower fairly soon but I suspect it will not begin until early- March or so. Bulls should be cautious in any event, as further upside may only serve to delay further technical damage. But this week s Mercury-Venus alignment may provide some support for the greenback, especially in midweek. Friday looks more vulnerable to declines as the Moon-Saturn conjunction could coincide with some selling. Next week (Mar 4-8) looks more problematic as Mercury turns retrograde. Some downside is likely here although I m uncertain if it will be sufficiently negative to break support at Depending on what has transpired in the preceding week, this kind of down move is quite possible. The following week has a higher downside risk given the Mars-Neptune alignment. A bearish outcome here is quite likely and the rest of March also has a bearish bias. A retest of rising channel support and the 200 DMA at is quite likely. Further downside also looks quite likely by April. The Dollar is likely to begin to strengthen sometime in April or May at the latest, and then continue to rally through

9 the summer. Depending on how low it goes in April-May, there is a possibility of the USDX reaching 100 by September. The Dollar looks much weaker in 2020 and beyond. Technical Trends (Dollar) Astrological Indicators Target Range Short term trend is UP bullish (confirming) (1 week ending Mar 1) Medium term trend is UP bearish (disconfirming) (1 month ending Apr 1) Long term trend is UP bearish (disconfirming) (1 year ending Feb 2020) Crude oil Crude extended its rebound again last week on hopes for a US-China trade deal and the likelihood of an OPEC production cut. WTI gained 2% on the week to $57.26 while Brent finished Friday just above $67. This bullish outcome was somewhat unexpected as I thought the first part of the week would have seen some selling. Despite the gain, WTI is showing signs that its rally may be consolidating. Bulls were unable to crack resistance at $57.50 after three attempts. Buyers moved in quickly after resistance was rejected, however, so a breakout is still looking somewhat likely. For now, the technicals suggest that this current up trend could last until a retest of the 200 DMA at $63. Horizontal support is the early February high of $56. Any move below this level would be bearish and could signal a deeper pullback. We can discern a rising wedge pattern now which has a bearish bias although they typically resolve into a more stable and bullish rising channel. The weekly Brent chart is quickly approaching its key horizontal resistance level of $70. This was previous support and is now acting as resistance. Further upside towards this level is likely but what really matters is what happens afterwards. A strong rejection of $70 would be short term bearish

10 although quite normal given the strength of this rebound. If buyers move in at key support at $64, then we could see the formation of a more bullish consolidation zone at $ A move back below $64 would be more bearish, of course. From a technical perspective, it is difficult to say if there will be a retest of the December low of $50 anytime soon. It s possible, but the long term view is still mostly bullish. Brent has seen a series of higher lows since the January 2016 low and thus argues for more upside. This week could go either way. I would still suggest caution given the underlying influences at work here. While bullish Jupiter is aligning with Pluto, the entry of Mercury into Pisces this week could have a negative impact on crude prices. I would tend to think that next week has more bearish potential since Mercury turns retrograde on March 5 th, but this week also has a high probability of at least one large down day. Given the fairly narrow daily price range in recent days, a large down day here could indicate a test of support at $56 and even the 20 DMA at $54. However, Friday looks more bearish in this respect so it is still possible that the early week could see more upside. I would have a bearish bias here in any event. Next week (Mar 4-8) looks more bearish as Mercury turns retrograde on Tuesday while forming a tense alignment with Uranus and Mars. The second half of the week looks more vulnerable to declines. Depending on what happens in this preceding week, I think a retest of the 50 DMA at $51 is quite possible here. The following week (Mar 11-15) looks more bullish as the Sun aligns with Jupiter and Pluto. We could see a large move higher. March and April look fairly positive although I m not sure how much upside we can reasonably expect. Pullbacks are still likely, especially in April, but it is unclear if they will seriously undermine the current rebound. More upside is likely in May and into June. But June and July should bring a significant correction which could well undermine the bullish view of the oil market. September also looks bearish and therefore it is possible we could see a second leg lower, possibly to a retest of the Dec 2018 low. Technical Trends Astrological Indicators Target Range (WTI) Short term trend is UP bearish (disconfirming) $54-56 (1 week ending 1 March) Medium term trend is UP bullish (confirming) $56-65 (1 month ending 1 April) Long term trend is DOWN bullish (disconfirming) $65-75 (1 year ending March 2020)

11 Gold Gold ended the week higher on weak data and more dovish talk from the Fed. After trading as high as 1350, gold closed Friday at This bearish outcome was somewhat unexpected as I thought the early week would have been more negative. Despite Thursday s pullback, the gold rally is still looking promising. The technicals are mostly positive and the planetary signals should also provide some support prices until April. Gold is quickly approaching an area of long term horizontal resistance at A breakout higher is possible, although one would think such an important resistance level might require several attempts and further consolidation. We shall see. Immediate support is near 1320 and the 20 DMA. The 20 DMA follows a rising channel which has acted as good support since November. Buyers have been moving in with every pullback to this line. Until it breaks, gold will remain in a strong up trend. The more important question is what could happen when this trend line is finally broken. A break below the line at 1320 would likely generate a retest of horizontal support at This is also important as a support level. I suspect buyers would step in at at least initially. If 1300 cannot hold as support, then there is a risk of another retest of the 200 DMA at This week is hard to call. I would stay cautious here even if the downside risk is only moderate. I still think there is a greater chance for a pullback this week and next week, although it will likely prove to be another buying opportunity within the larger up trend. The early week Venus-Lunar Node conjunction could go either way although we should note a higher possibility of a decline. And a large move in either direction is more likely with this combination. Wednesday s Moon-Jupiter conjunction looks bullish, although Friday s Moon-Saturn conjunction leans bearish. If the early week Venus pattern is bullish, then we could easily see a retest of But with less bullish planets for the rest of the week, it is unclear if any gains could hold by Friday. Next week (Mar 4-8) looks more bearish as Mercury turns retrograde on Tuesday. I would think there is a high probability of another pullback and a break below the 20 DMA is quite possible here. The second half of the week looks more bearish than the early week. But the following week (Mar 11-15) should be more bullish as the Sun aligns with Jupiter and Pluto. I expect gold to stay generally bullish through

12 March and into April. A move above 1375 is not out of the question but I would be reluctant to predict it. A significant pullback will likely take place in the second half of April, after Jupiter turns retrograde. Saturn turns retrograde on April 30, so that is one likely time period when we could see some selling. We could see a retest of the 200 DMA at 1250 during this more bearish time and a major technical breakdown is worth considering. Another rally attempt is likely in May but there is greater downside risk in May and June which argues against a resumption of the up trend. We shall see. Further downside is more likely than not through Q3. Gold will likely stage another major rally in Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) (1 week ending 1 March) Medium term trend is UP bullish (confirming) (1 month ending 1 April) Long term trend is DOWN bullish (disconfirming) (1 year ending March 2020) 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