14 July 2018 Volume 11, Issue 29

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1 14 July 2018 Volume 11, Issue 29 Summary for week of 16 July 2018 Stocks likely trending lower this week Dollar bullish and could test resistance again this week Crude oil choppy but with bearish bias Gold vulnerable to declines this week US Stocks Stocks extended their gains last week as trade worries simmered on the back burner while investors looked towards the upcoming earnings season. The Dow rose by 2% for the week to 25,019 while the S&P 500 finished at Other indexes fared better as the NASDAQ reached a new all-time at This bullish outcome was in keeping with expectations as I thought the Jupiter direct station combined with its Mercury-Neptune alignment would likely outweigh any emerging negativity. The early week was bullish as forecast and Thursday was also higher although Wednesday proved to be unexpectedly bearish. Friday was fairly neutral although I thought we might have seen a bit more caution. Despite the US announcement of more tariffs on Chinese goods, the market seems to be taking all in stride for now. If China retaliates this week upcoming then we could see the end to this blasé attitude towards Trump s protectionism. A trade deal with China is still possible and no doubt that is what the market is anticipating. Hence, all these tariffs are merely negotiating tactics that may not end up affecting the bottom line. Corporate earnings will be front and center this week as investors will be hoping for signs the tax cut is kicking in and more positive forward guidance. Earnings season should be bullish if for no other reason than to shift the focus away from trade for a while. Meanwhile, the yield curve continues to flatten as the 2y-10yr difference is now just 24 basis points. Given the historic month lag between a bond yield inversion and recession, this doesn t mean that stocks are in imminent danger of entering a bear market. But we are getting closer.

2 The astrological outlook is more bearish now. Yesterday s New Moon marked a possible turning point in the rebound. For most of 2018, stocks have approximately followed the lunar phases with declines into and around the time of the Full Moon and then rebounds occurring into the New Moon. The full lunar cycle is about days. The lunar cycle is a documented phenomenon, although this year is has been uncannily accurate and very pronounced. If this cycle holds for another two weeks, we are more likely to see falling prices as we approach the Full Moon and lunar eclipse on July 27 th. The likelihood of some kind of pullback is higher here given the alignment of Mars with Saturn and the Lunar Nodes in late July and early August. August is looking bullish for now so the roller coaster could last a while longer. The technicals look bullish for now. Last week saw the SPX finally make a new interim high of 2801 which was slightly above the March 13 and June 13 highs. The higher highs are bullish but the breakout needs to be more decisive for it to be confirmed. It is still possible stocks could fall back below this resistance level. The next level of resistance is the 2840 area from the rising channel that connects the April, May and June highs. No doubt bulls are staying in long positions in anticipation of this pattern playing out. It seems like a proposition on the face of it as a false breakout above 2800 still seems possible. And bears can point to the bearish rising wedge pattern off the June 27 low. This support trend line was tested on Wednesday and Friday and if it breaks we could see a possible gap fill at 2760 from last Monday. This is where the 20 DMA is located so that adds to its possible magnetic pull. If we do see a pullback this week to the 2760 and the 20 DMA, it likely would be bought fairly aggressively and could spark another rebound. Of course, a subsequent lower high (2790?) would be the plausible basis for the deeper sell-off in late July that I am expecting. The weekly Dow chart is less bullish than the SPX or any other index. It has yet to move above its March interim high and stochastics remains in a bearish crossover. Another positive week would change that, however, although for now this chart really could go either way. It still resembles a bearish descending triangle although it may also resolve into a less bearish pennant pattern. If the 50 WMA is broken and then horizontal support at 23,500 is also broken, then the downside target would be 20,500. The Russell 2000 and NASDAQ are still outperforming other indexes. While the new ATH for the NASDAQ is obviously positive, we should note that it is sitting on resistance of its 2018 rising channel. Marginally higher highs are possible but another pullback to rising support trend line at 7200 is perhaps more likely than a big breakout to the upside. The Russell may be forming a bullish cup-andhandle pattern with an upside target of 1780 or a bearish double top pattern with a downside target of This downside target is very close to the 200 DMA.

3 This week could see some downside although I am uncertain when it is most likely to happen. Monday has a mix of influences with a bearish Mars-Venus aspect that is closer in the morning. The afternoon Moon-Jupiter-Neptune alignment looks bullish. While these aspects could manifest in sequence (i.e. lower open, then rebound) in truth I don t have a strong sense of which may ultimately prevail. But a bearish Monday is a plausible enough scenario that we should take seriously. We could then get a bounce into Tuesday and/or Wednesday. Thursday is hard to call although the Sun-Moon square angle does not look positive. Friday s Mars-Lunar Node conjunction is bearish although it could manifest negatively across any one of several days this week due to the slow velocity of Mars. If Friday has had a negative open, then the afternoon Moon-Jupiter conjunction argues for a rebound during the day. So could we see a higher high this week? It s quite possible although I don t see 2840 here, especially if Monday is negative. Perhaps we will get some kind of decline early in the week and possibly even the gap fill to 2760 and then bounce modestly afterwards. I would lean bearish for the week overall although I would not be surprised by a neutral outcome either. Next week (July 23-27) looks more bearish as the Full Moon/lunar eclipse on Friday is likely to do some damage. Monday looks bearish but Tuesday looks very bearish as the Moon conjoins Saturn and thereby aligns with Mars and the Lunar Nodes. Wednesday could bring some relief but Thursday and Friday are again very bearish as the Sun opposes Mars and Moon and activates the larger Saturn pattern. The most bullish scenario here would be holding the range of in the week of July 16 and then down to horizontal support at during the week of July 23. I tend to think stocks will be more bearish than that with 2760 possible this week and then maybe during the Full Moon week. This would equate to perhaps a test of channel support at 7200 on the NASDAQ. We shall see. The first week of August also could bring some downside on the Mars-Uranus square so there is a chance that the Full Moon on the 27 th may not mark the low. August as a whole looks more bullish as Jupiter aligns closely with Neptune. The rebound could be fairly strong and may well retest resistance at 2800 or perhaps go even higher by early September. September looks more bearish as Mars ends its retrograde cycle and aligns again with Saturn and the Lunar Nodes. The second half of September looks more bearish than the first half in that respect. October could bring a bounce but November looks bearish again. Depending on the size of preceding moves, it is possible we could see lower lows in November. The number of bad transit setups from July to November makes lower lows a very real possibility. A strong rebound is likely to begin in December and carry over through most of Q Q2 looks bearish again with a correction likely although given the strength of the preceding rally in Q1, it may not be a lower low. The second half of 2019 looks generally more bullish. Technical Trends Astrological Indicators Target Range

4 Short term trend is UP bearish (disconfirming) SPX (1 week ending July 20) Medium term trend is UP bearish (disconfirming) SPX (1 month ending Aug 20) Long term trend is UP bearish (disconfirming) SPX (1 year ending July 2019) Indian Stocks Stocks moved smartly higher last week as trade worries eased and investors focused on earnings. The Sensex gained more than 2% and hit a new all-time high of 36,541 while the Nifty finished at 11,018. This bullish outcome was in line with expectations as I thought the early week Mercury- Jupiter influence would likely push prices higher. Indeed, Monday and Tuesday were the most bullish days of the week and Friday saw modest profit taking as expected. India Inc showed off its promise last week as the new ATH reflected its leader of the pack status among emerging markets. While East Asian markets have struggled under the twin headwinds of rising US interest rates and Trump s protectionism, India continues to relatively flourish under the Modi administration. Inflation and rising energy costs are still a source of concern going forward, but there is a possibility that domestic rates can stay low enough to foster more investment for both government and private enterprise. The jury is still out on the global trade regime with the US engaged in some bare knuckle negotiating tactics. If things go poorly and no deal is struck between the US and China in the coming weeks, then this would likely impact markets worldwide. For now, however, markets are anticipating a successful resolution which will not diminish growth prospects.

5 The astrological outlook is turning more bearish, however. As we approach the Full Moon and lunar eclipse on 27 th July, there is likely to be more down days. Full Moons have a bearish bias in any event but this one looks especially bearish as the Sun opposes Mars as both conjoin Rahu and Ketu. Meanwhile, Saturn is also aligned with all of them creating a potentially nasty impact on sentiment. August should see a recovery as Jupiter aspects Neptune more closely but it is unclear if the indices can reach a higher high. If the Full Moon is very bearish and takes the Nifty back below the 200 DMA at 10,428, then higher highs may have to wait. Another pullback is likely in late September so perhaps bulls will have to wait for October and early November for a new high. The technical outlook is bullish. Last week saw the Nifty break above its previous high of 10,900 and approach its ATH at 11,171. Friday s pullback was normal consolidation below resistance and should not give bulls much to worry about for now. Bulls will keep control as long as support at 10,900 is defended. A move below 10,900 may not be too damaging if it is only on an intraday basis. A close below 10,900 would be more problematic for the bulls. One would think the gap below 11,000 will have to be filled in the coming days one way or another. Bears may be hoping for a gap fill and then a retest of resistance at 11,000. If that rebound failed, it would create an island top and then initiate more selling and a possible break below 10,900. While bulls are hoping for a fast breakout, the chart may well argue for another test of the 200 DMA at 10,400 before a breakout higher can take place. The moving averages are rising and are clearly pointing towards higher highs but more consolidation below resistance at 11,100 is looking more likely in the near term. If support at 10,900 holds in the days ahead, then another test of the Nifty ATH is likely. But if support at 10,900 breaks, then bulls should hope for a low above the June low, probably closer to the 50 DMA. The Sensex did manage to break above its January high although it needs some follow through to confirm the new high. If there is a pullback this week back under the January high, then it is a possible false breakout. Nonetheless, the chart is bullish and argues for a breakout eventually, whether it happens now or down the road. Bears are hoping for a double top scenario which would see a major retracement from these levels. However, the rising moving averages point towards higher highs. If the Sensex makes a sustained break above 36,500, the measured move upside target is 40,500 over the next 6-12 months. Meanwhile, Infosys (INFY) sold off Friday in US trading after reporting earnings. Buyers moved in to create a higher low, however, and that suggests that the medium term bullish story is likely to continue, albeit with some consolidation. HDFC Bank (HDB) broke above resistance to new highs last week as it followed the broader market higher. Some follow through to the upside is necessary to confirm the bullish breakout. At that point, resistance will become support.

6 This week looks more bearish. The early week should see some downside as Mars aspects the Moon-Venus conjunction on Monday. This could produce a sizable pullback and that gap fill scenario below 11,000 is quite possible. A test of support at 10,900 is also a potential outcome. Tuesday looks somewhat better as the Sun enters the sign of Cancer although it does not look overly bullish either. Wednesday s Moon-Saturn square could produce some selling so that could retest support again. Thursday lacks any clear indications although I would have a bearish bias given the approach of the Full Moon next week. Friday looks more clearly bearish as the Moon forms a tense square alignment with Mars, Rahu and Uranus. Overall, the week favours the bears and suggests some consolidation below resistance at the very least. The slow-motion conjunction of Mars and Ketu means that specifying the particular day for declines is more difficult than usual. Bulls should therefore be cautious with long positions given this underlying negative alignment. I suspect the Nifty could close the week below 10,900. Next week (July 23-27) looks more bearish. The main feature will be the Full Moon on Friday, the 27 th. The early week could see a rebound as Venus aligns with Jupiter and Neptune. It does not look overly strong or very reliable, however. But if the preceding week has seen some significant selling, then the early week here is a good candidate for an oversold bounce. Things could get dicey again by Wednesday as the Moon conjoins Saturn and Mercury turns retrograde. Thursday s Moon-Venus-Pluto alignment could see some buying but this is likely to be nullified by Friday s tense alignment. I think there is a real chance that the Nifty falls to 10,500 and could test its 200 DMA. The following week (July 30-Aug 3) should see some early gains on the Mercury-Venus alignment but the late week looks bearish again as on the Mars-Uranus square. It is possible this could produce a lower low. August looks choppy with a bullish bias as Venus transits the sign of Virgo. While this is usually a bearish influence, the ongoing Jupiter-Neptune aspect should offset most of the negativity. I would not necessarily expect the Nifty to rebound strongly with higher highs in August. We shall see. September looks bearish again as Mars ends its retrograde cycle and aligns with Saturn and Ketu for a second and final time. While September may well be bearish, I would not necessarily expect lower lows. A rebound is likely in October but November looks very bearish. Lower lows are possible in late November or early December. December should begin a rebound that lasts into Q This will likely get the bulls back on track. After a correction in Q2, stocks may move higher through the rest of Technical Trends Astrological Indicators Target Range Short term trend is UP bearish (disconfirming) 10,800-10,900 (1 week ending 20 July)

7 Medium term trend is UP bearish (disconfirming) 10,500-10,800 (1 month ending 20 Aug) Long term trend is UP bullish (confirming) ,500 (1 year ending July 2019) Currencies The Dollar pushed higher last week as concerns over trade enhanced its safe haven status while the ECB hinted at a more dovish stance. The USDX closed the week at 94.5 while the Euro slipped below This bullish outcome was in keeping with expectations as I thought the Mercury-Jupiter alignment could lift the greenback in the first half of the week. As it happened, most of the move occurred on Wednesday. As expected, we did see a test of resistance at 95 although bulls could not hold that level by Friday close. The technicals look decidedly mixed for the Dollar as a possible head and shoulders top may be forming. A trading range between 93 and 95 is taking hold as 95 remains a significant hurdle for bulls. If the neckline at 93.5 is broken to the downside, then we could see the Dollar trading closer to 91. This is a previous resistance level from the first quarter and a bit below the 200 DMA. A brief move down to the 200 DMA is certainly quite possible from a technical perspective although it would likely be seen as a buying opportunity by more cautious bulls seeking a lower entry. The weekly Euro chart shows strong resistance at 1.18 and an inability to form its right shoulder. Over the past two months, we can see the series of higher lows and lower highs in a pennant pattern as the market may be coiling before the next big move. Pennants are continuation patterns so that argues for another move lower in the months to come. The bearish crossover of the 20 and 50 WMA also looks somewhat bearish. This week looks mixed. The early week Mars- Venus alignment leans a bit bullish for the Dollar although the indications are not clear. The midweek looks somewhat weaker, however, although the late week Moon-Jupiter conjunction could see buyers return. While I would maintain my overall bullish bias for the next few weeks, this week could go either way. I would nonetheless think a big move lower is unlikely, just as a push above resistance at 95 is also not something bulls should expect. Next week (Jul 23-27) looks more bullish as Venus aligns with Jupiter and Neptune. If the Dollar is within striking distance of 95 beforehand, then this is the

8 kind of alignment that could produce a breakout higher. The following week also looks bullish although I think August overall may be less positive, perhaps reflecting some consolidation after a bullish breakout above 95. September looks bearish with a significant pullback likely which may extend into October. November and December will likely see another up trend although it is unclear if this can reach new highs. Generally, I think the Dollar will remain fairly bullish in the first half of A significant correction is likely in May or June, however, so that could mark a turning point. The rest of 2019 looks more mixed. Over the long term, the Dollar may trend lower after Technical Trends (Dollar) Astrological Indicators Target Range Short term trend is UP bullish (confirming) (1 week ending July 20) Medium term trend is UP bullish (confirming) (1 month ending Aug 20) Long term trend is DOWN bullish (disconfirming) (1 year ending July 2019) Crude oil Crude oil fell sharply last week as supply worries lessened after Libyan ports reopened. WTI lost 4% on the week to $71 while Brent settled below $75. This bullish outcome was unexpected as I thought the early week gains would be sufficient for a positive week. While the early week was slightly positive, bulls did not match the previous week s highs. I did think Wednesday could be bearish, although I did not consider the possibility of such a large decline. Crude pulled back to the 50 DMA and we did see some late week buying at that support level. A break below the 50 DMA at $69 would be bearish and would invite a retest of the previous low at $64. While the chart is still bullish over the medium term, a longer period of consolidation would not be too surprising. Last week s sharp pullback likely negated the possibility of a quick run up to $80. Resistance is now $75 and it may prove to be more difficult to break. Again, the 50 DMA could be key in this respect. If the pullback holds here, then a push to higher highs is more likely in the near term. If the current pullback evolves into a longer consolidation, then we could see the 200 DMA at $62 tested fairly soon. The 200 DMA will rise towards the level of current

9 pullbacks in the coming weeks. The weekly Brent chart shows the current period of consolidation under resistance at $80. Support is near the 20 WMA and the technicals suggest a breakout to the measured move target of $87-88 is more likely than not. Horizontal support is at $72. A weekly close below $72 would be bearish as the potential double top pattern could play out. This would have a downside target of $64. Clearly, bulls need to defend $72 in order to keep the upside momentum going. This week looks mixed with a bearish bias. I think the second half of July is more bearish than bullish and so we could see some downside pressure again this week. The early week looks choppy with the bearish Mars-Venus aspect at odds with the bullish Moon-Venus conjunction. I would lean bearish for Monday but at the same time I would not rule out a sharp rebound as well. The Moon-Saturn square spans both Tuesday and Wednesday so we should see one down day there, with Tuesday looking more bearish than Wednesday. If the early week has been bearish, then a rebound is more likely to start on Wednesday as Venus aligns with Jupiter. The late week looks more bullish than bearish. I would not rule out a positive weekly outcome but the early week declines should put the bulls on notice. Next week (July 23-27) looks bearish. The Sun-Mars opposition occurs at the same time as a lunar eclipse and could coincide with a sharp move in price. This is normally a bearish combination. Early week gains are more likely on the Venus-Jupiter alignment on the 23 rd. But downside risk will increase as the week progresses. There is a possibility that we could see a test of the 200 DMA at $62 around the time of this lunar eclipse on the 27 th. Bulls should be very cautious. August should see a gradual rebound as Jupiter aligns with Neptune and higher highs are possible by late August. September should see a pullback on the Saturn-Lunar Node alignment but it may not do any major technical damage. October may see a modest rebound but November and December should see another move lower. This looks like it could be a significant correction. A major rebound is likely to begin by mid-december and extend into Q Q2 should see a major correction before trending higher again in the second half of the year. Technical Trends Astrological Indicators Target Range (WTI) Short term trend is DOWN bearish (confirming) $68-73 (1 week ending 20 July) Medium term trend is UP bearish (disconfirming) $64-72 (1 month ending 20 August) Long term trend is UP bullish (confirming) $70-85 (1 year ending July 2019)

10 Gold Gold slipped last week as the Dollar remained the safe haven of choice in the midst of trade uncertainty. Gold fell 1% on the week to This bearish outcome was unexpected as I thought the early week upside from the Mercury-Jupiter alignment would prevail by Friday. While Monday was higher, prices fell thereafter. Although I was wrong on the week, the month of July is shaping up to be as bearish as I have expected. Given we are only half-way through the month, it seems likely that support at 1240 will not hold. The bullish view was counting on a significant bounce off 1240 last week. That never really happened as Monday s long upper wick showed a rejection of the 20 DMA and a very weak market. Bulls are hoping now for a double bottom bounce. This pattern has an upside target of 1300 if 1270 is exceeded. If 1240 breaks as support, then one possible downside target would be the area. This is the measured move target of the previous trading range ( ). It also roughly matches a significant previous low at While the size of the next leg lower could be moderated somewhat, it is unclear where a higher level of support may come in. Perhaps 1200 would be the next support. A push back over 1300 would be required to make this chart more plausibly bullish. At the moment, that doesn t seem at all likely. This week looks mixed with a bearish bias. I am retaining a bearish bias although there are a couple of bullish alignments in play that could generate some upside. Monday s Moon-Venus conjunction is one such alignment which could see some early week gains. However, I would not say this is a high probability bullish day due to the close aspect from Mars. The negative Mars influence is more likely to manifest early in the day while the positive Moon influence hints at a rebound later in the trading session. The larger problem is that the Mars-Lunar Node conjunction will be in effect throughout the whole week and therefore could undermine positive sentiment on any day. The late week appears to have a greater downside risk as the Sun moves closer to its alignment with Mars. I would keep an open mind about where gold may finish this week. It is possible it could hold above 1240 is the early week sees a bounce. But a breakdown of 1240 looks more likely. Next week (July 23-27) seems more bearish. The Full Moon/lunar eclipse aligns on the 27 th with the Sun-Mars opposition and suggests the possibility of larger than normal moves. Some upside is possible early in the week on the Venus-Jupiter alignment but this will likely be sold. The second half of the week is more bearish. Volatility is likely to spike this week so there could be sharp moves in both directions. I think the bears are strongly favoured here but some brief upside is also possible, probably on an intraday basis. More downside is possible in the following week on the Mars-Uranus square on Aug 3. August looks more positive as Jupiter aligns with Neptune. However, I think we may only see an oversold bounce that doesn t improve the technical outlook too much.

11 September s Saturn-Lunar Node alignment is likely to be bearish and could see gold fall again, perhaps with a retest of the early August low. October may be more bullish but another pullback is likely to begin sometime in November. A strong rally should begin sometime in December and extend through much of Q Overall, 2019 looks fairly mixed although the second half of the year may be more bullish. Technical Trends Astrological Indicators Target Range Short term trend is DOWN bearish (confirming) (1 week ending July 20) Medium term trend is DOWN bearish (confirming) (1 month ending August 20) Long term trend is DOWN bearish (confirming) (1 year ending July 2019) Disclaimer: For educational and entertainment 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