Thursday, March 15, 2012

DJIA vs Sunspots

Periods of solar prominence (sunspots) pour forth energy, causing all earthly activities to increase, including stock market trading. The usual result of this stimulus is a major market turning point, either up or down.

Increased sunspot activity occurs whenever the planets Mercury, Venus, Mars, and Jupiter are on the same side of the Sun as the Earth. The greatest influence of all this tidal-like force occurs when Jupiter and Venus are in a helio-centric line-up with the Earth at 00, 450, and 900, but lesser activity produces the well-known Dow cycles of 89 weeks, 124 weeks, and 208 weeks.

A very good illustration of this market indicator occurred on October 19, 1987, when the market dropped 505 points. Jupiter was exactly opposite the Sun, increasing solar flares and market timing--thus forcing a market turning point. Another example is October 27, 1997, when Jupiter was square the Sun.

Helio-centric aspects to the Sun mark major market turning points, both up and down. Certain aspects are especially powerful and will influence the market for five to seven days. Examples of powerful benevolent aspects are Jupiter or Venus in aspect to Uranus, Sun, or Mercury. Powerful negative aspects are Saturn to any planet and Mars to anything except Venus and Jupiter. 

Flux is a measure of the energy output of the sun, and is an excellent indicator of overall solar activity levels.  It is associated with the 11-year sunspot cycle, but it varies a whole lot on a daily basis, as the chart illustrates.  

So why could it be that rising solar flux would lead to rising stock prices, and vice versa?   That is the deep and possibly troubling question.  Some people have theorized that the fluctuations in the amounts of charged particles hitting the wiring in our brains can affect collective moods, just as they can affect electrical power grids and microcircuitry.  That's as good of an explanation as any.  I usually operate on the philosophy that if the correlation is good enough, no explanation of the root cause is necessary. 

Here is something more to chew on: Perhaps it is not the radio flux that is really doing the job of affecting our brains' wiring, but rather the spikes in solar flares that seem to arise out of the low points in radio flux.

The next chart looks at the counts of "S Class" solar flares. One can see that the biggest spikes in the numbers of these flares tend to coincide with meaningful bottoms for stock prices.  Those spikes also happen to arrive at minimum points for total radio flux, as if the surge in solar flares kicks off the next rising phase for that measure of solar activity.  The DJIA's rise up out of the minor price bottom on Dec. 19, 2011 coincided with an upward surge in the number of these S-Class flares.  Other spikes in flares in 2011 have also coincided with important lows, although not all price lows have flare spikes to explain