The Poetry of Logical Ideas | M.A. Vukcevic

» Mathematics is the poetry of logical ideas, it is the silent language of reason. «

M.A. Vukcevic

 2012

Energy Flow Theory & Financial Markets | Al Larson

As planets orbit the sun, they exert tidal forces upon the gases of the sun. These tidal forces cause swirling motions on the sun, creating sun spots, solar flares, coronal holes, and other energy events. All these effects combine to vary the amount of radiation that leaves the sun. That solar radiation is our sole source of energy. We are subject to every fluctuation in it. Solar radiation travels to the earth in two ways: as direct radiation, such as sunshine and radio waves, and as charged particles carried by the solar wind. This flow of charged particles forms a torrent of energy that blasts earth creating a bow wave and a wake, just as a boat going upstream would do. This bow shockwave forms a magnetopause between the earth and the sun. It interacts with the earth’s electromagnetic field, shaping and adding energy to it. At the poles, charged particles follow the magnetic lines of force into our atmosphere. This creates a charged layer called the ionosphere.

As this solar wind passes earth, it shapes our magnetosphere into a teardrop shaped envelope of trapped charged particles. As solar radiation varies so does the earth’s magnetic field, atmospheric ionization, and temperature. Scientists have tracked down a host of relationships between these events and a variety of earthly phenomena such as weather, climate, crime rates, plant growth rates, frequency of thunder storms, blood Ph levels, psychiatric emergencies, and many others.

As part of this activity the solar wind charges our ionosphere to a voltage of approximately +300,000 volts. This charged layer above the earth represents the positive end of a battery. When you stand on the ground you are standing on the negative end of this battery. This is the earth’s electric field that we all live in. When you stand erect, it places a voltage on the top of your head of about 240 volts. That is the same voltage as used by your oven element. Fortunately for us, this is not a high current power source. Otherwise, we would fry.

 

 

 

We are affected by this field. This voltage causes currents to flow through us as we live on earth. These currents are approximately 2000 times as strong as the biological currents that run our brain, our nervous system, our muscles, and our organs. All of our body’s electro-chemical systems are subject to the fluctuations in these currents. The ionosphere and the charges on it form a very dynamic system. Events such as solar flares can cause rapid and large changes in this voltage. Our biological circuits feel these changes. These changes can affect all our biological processes including our emotional moods. Scientific studies have shown that changes in ionization cause people to feel giddy to gloomy. These moods show up in the markets. It is well accepted that markets move in response to fundamental forces and investor psychology. A major finding of my work is that investor psychology is driven by the physical energy system. Those emotional rallies and declines are controlled by the currents that run through us. We call those currents emotions.

[...] I have related the timing and price level of market turns to these currents. I have exhaustively verified every link in this chain of cause and effect. I have developed a solid mathematical knowledge of how this energy flow controls pattern, price, and time in markets. While it is not possible in a chaotic system to make perfect predictions, I have been able to formulate a computer program called XGO which predicts markets with between 60% and 90% accuracy […] This S&P forecast has been running about 80% accurate over the past two months. It was computed over one year ago, and used no price data! It is simply a computation of the energy coming into the S&P. These forecasts can be made for any market, for any time in the future. This is a unique scientific technology.

Quoted from:
Al Larson (1997) – Energy Flow Theory.

See also:

Hans Hannula ( 1987) - In Search of the Cause of Cycles.

Hans Hannula (1991) - A Lunar Chaos Theory.

Al Larson (1997) - Your Electric Life.

Al Larson (2001) - The Sun and the S&P 500.
Al Larson - www.moneytide.com

DrAlLarson - YouTube Channel.

TPR - Financial Markets and Solar Activity.

Financial Markets & Seasonal Geomagnetic Field Variation | Hans Hannula

Any grade-school pupil can tell you when the seasons begin. In the northern hemisphere, generally, spring begins March 21, while summer begins June 21. Autumn begins September 23, and winter begins December 21. Actual dates may vary by one day in a particular year. So step one is simple.

The physical reason behind the seasonal cycle is the tilt of the Earth's axis. The 23.5-degree tilt of the Earth's axis causes more direct heating of the northern hemisphere in the summer, when the Earth tilts toward the sun. It causes less heating in the winter, when the Earth tilts away from the sun. This change in heating and cooling causes the seasonal weather patterns that we are familiar with.

 

Charged particles from the sun form a teardrop-shaped envelope about the globe called the magnetosphere.

Not so well known is the effect of the seasonal variation on the Earth's geomagnetic field. As the sun emits energy, charged particles flow outward, carried by the solar wind. As these particles sweep past Earth, they form a teardrop-shaped envelope around the globe called the magnetosphere.

There is a seasonal variation in two important parts of the magnetosphere. When the Earth tilts toward the sun in the summer, the charged particles can more directly flow into the north pole, where they affect the Earth's magnetic field. This effect is lessened when the Earth tilts away from the sun in the winter.

The second magnetic effect is on the magneto-tail, that part of the magnetosphere which streams away from the sunny side of the Earth. As the Earth tilts toward the sun, this tail "rides higher." As the Earth tilts away from the sun, the tail "rides lower." This affects how our moon, which moves in and out of the magnetosphere, interacts with the Earth's magnetic field.

Australian Government Bureau of Meteorology (2023):
The Seasonal Distribution of Geomagnetic Disturbances.

So what does this have to do with stocks and commodities? Scientific evidence suggests that these fluctuations in the Earth's magnetic field affect humans. Studies show that magnetic field changes are linked to blood PH changes, which in turn cause mood swings. Perhaps the psychological mood swings of traders are also subject to these magnetic field changes.

More obviously, the seasonal cycle could be expected to affect crop prices, such as those of wheat, corn and other commodities. Similarly, with most businesses running on a quarterly profit cycle, seasonal variations in the buying and selling of materials and equipment can be expected. Thus, on both a fundamental and technical basis, a trader can expect season price variations in stocks and commodities.

To perform step 2, mark the dates of the cycle on a chart with solid dots, and place them above or below the price as you estimate that price is high or low relative to what it was approximately one-fourth cycle earlier. Points do not necessarily have to alternate between high and low.

Now look for cycle "inversions." If two lows or highs occur in succession, the cycle has "inverted" between the points. A normal inversion point is halfway through the cycle.

Quoted from:
Hans Hannula (1991) - The Seasonal Cycle. In: Stocks & Commodities V. 9:11 (458-460).

 

See also:
Tianbao Zhou, Xinghao Li & Peng Wang (2021) - Chinese Stock Indices, Gann Time Theory & Solar Terms.

Chinese 24 Solar Terms for 2023.

 

 

CNN Business - Fear & Greed Index as of June 16, 2023.

Geometry of Infinite Mind | Ernest Emery Richards

Ernest Emery Richards (1990) - All life on Earth has developed under the influence of this geomagnetic field which varies in structure and dynamic properties via geomagnetic pulsations. These pulsations are due to the interaction of the plasma waves coming from throughout the Solar System and Cosmos and interacting with the Earth's magnetosphere.

Solar System and Brainwave Frequencies.

When our brain and body rhythms are measured electromagnetically, they are found to occur prominently within what is termed the ELF (extremely low frequency) spectrum and lower. This brainwave spectrum is also divided into band segments, called the alpha (greatest amplitude)(8 to 16 Hz.), beta (16 to 32 Hz.), theta (4 to 8 Hz.), delta (2 to 4 Hz.), and zeta (1 to 2 Hz.), ranging from 32 cycles per second (Hertz) and down below 1 cps (Hz.).

Earth Frequencies.

The measurable presence of these different frequencies seems to indicate changes in individual consciousness. An example might be that a relaxed, attentive state develops strong alpha wave rhythms; these are also the prominent Earth resonant frequency ranges. The theta rhythms are found to occur during the dream period, and also while experiencing a spontaneous creative, intuitive state. The theta frequencies are seen to have strong lunar rhythm harmonics. The Moon has long been associated with our intuitive, creative capacity.

When calculations are performed related to the solar system and the planets, it is found that all of the planets and most of their moons have frequency aspects which fall within our brainwave spectrum. All of the planetary systems have electromagnetic field structures and prominent magnetospheric frequencies. Our home solar system forms a complex, harmonically interrelating, multi-octave musical instrument composed of over forty octaves of vibrational interplay. Your brain/body structure resonates to those continually fluctuating field patterns as they beat against the Earth's, Moon's, and Sun's natural rhythms.

[...] The Earth sets up a pattern of electromagnetic vibrations between its circumference frequency, around 7.5 Hertz (cycles per second) and its radius frequency of 47 Hertz (Hz.). The atmospheric cavity Schumann Resonance spectrum has been measured via electronic detection instruments. This Schumann Resonance, which occurs within the Earth and its surrounding energy field, has immediate impact upon planetary life-forms. When we measure our own brainwave electromagnetic signals, we see displayed these very same Earth vibrations. Since the Earth is very much alive vibrationally, these electromagnetic signals are continually changing and interacting.

Telepathy on a Global Scale │ Michael Persinger

“No more secrets.” (HERE)

“Suppose you had access to every person’s brain, and they had access to yours?” asks Dr. Michael Persinger (HERE), cognitive neuroscientist and professor at Laurentian University in Ontario. Dr. Persinger is convinced that this is not only possible but is immanent in the coming future. His pioneering research (HERE) shows a strong correlation between the Earth’s magnetic field and the human brain: “Very small changes in the activity of the Earth’s magnetic field due to alterations in solar activity can affect all human beings. These direct effects are primarily upon the subtle but complex electromagnetic fields that interact with everyone’s consciousness due to the marked similarity of the characteristics of our brains and our genetic history. This creates the potential for the function of every person’s brain activity to be changed without their awareness.” If Michael Persinger is correct, the Earth’s magnetic field is constantly interfacing with our own brains in such a manner as to influence our thoughts, emotions and behaviors. This interface, however, seems to have another effect: Dr. Persinger’s research seems to indicate that the geomagnetic field can store and transmit all the information of every human brain in history. And if this informational reservoir can be tapped into, there will be no more secrets.

SPX vs Solar Activity | 10.7 cm Flux | Sunspots | Ap Index

Russell 2000 Index vs Galactic Cosmic Rays

Russell 2000 Index vs Galactic Cosmic Rays

Saturday, March 11:
Galactic Cosmic Rays (impacts per minute) │ Corrected for Pressure Data │ Shifted  + 7 CD

Update Monday, March 13:
Galactic Cosmic Rays (impacts per minute) │ Corrected for Pressure Data │ Shifted  + 2 CD

Very high energy gamma ray map of the Galactic Center region Sagittarius A* (pronounced Sagittarius
A-star, standard abbreviation SgrA*). The color scale shows the number of gamma rays per pixel, while
the white contour lines illustrate the distribution of molecular gas. Their correlation points to a
hadronic origin of gamma ray emission. The right panel is simply a zoomed view of the inner portion (HERE).

SPX vs Galactic Cosmic Rays

Galactic cosmic rays are the most energetic of particles found in space. The most prevalent are high-energy protons, but as with particles from the Sun, there are also much heavier ions, ranging from the nuclei of helium atoms (atomic weight four, or four times the weight of a proton) to the relatively abundant ions of iron (weight 56). And they travel outward at speeds that can considerably exceed most particles of solar origin. The reason for the great energies and high speeds of cosmic rays, and why they include heavy ions such as iron, nickel and zinc, is that they are propelled outward from cataclysms far more violent than any large solar flare. The source of most cosmic rays is thought to be explosions of entire stars (supernovae). The solar cycle is an approximately 11-year period of varying solar activity including solar maximum where the solar wind is strongest and solar minimum where the solar wind is weakest. Galactic cosmic rays create a continuous radiation dose throughout the Solar System that increases during solar minimum and decreases during solar maximum. Because cosmic rays are electrically charged they are deflected by magnetic fields, and their directions have been randomized, making it impossible to tell where they originated. However, cosmic rays in other regions of the Galaxy can be traced by the electromagnetic radiation they produce. Supernova remnants such as the Crab Nebula are known to be a source of cosmic rays. In addition, most cosmic rays are confined to the disk of the Galaxy, presumably by its magnetic field. More HERE

SPX vs Solar Activity | Sunspots + 10.7 cm Flux | Forecast for March 2017

Mar 01 (Wed) and Mar 05 (Sun) are the upcoming SoLunar Turn Days (HERE);
Mar 05 (Sun) and Mar 07 (Tue) the upcoming Cosmic Cluster Days (HERE)

Sunspots and the Price of Corn and Wheat | William Stanley Jevons

William Stanley Jevons (1835–1882)

William Stanley Jevons (1835–1882) was a British economist and philosopher who foreshadowed several developments of the 20th century. He is one of the main contributors to the ‘marginal revolution’, which revolutionized economic theory and shifted classical to neoclassical economics. He was the first economist to construct index numbers, and he had a tremendous influence on the development of empirical methods and the use of statistics and econometrics in the social sciences. Jevons also analyzed business cycles, proposing that crises in the economy might not be random events, but might be based on discernible prior causes. To clarify the concept, he presented a statistical study relating business cycles with sunspots.

Daniel Kuester & Charles R. Britton (2000) - William Stanley Jevons summarized his thoughts on the effects of weather on economic activity in three chapters of his book Investigations in Currency and Finance (1909). An in-depth examination of these essays reveals some very interesting conclusions. In the first essay entitled “The Solar Period and the Price of Corn” (1875) he first investigates the striking similarity between the length of many historical business cycles and the length of the average length of the sunspot cycle. Jevons finds that the prices of most agricultural products vary dramatically over an eleven year cycle. He cites English agricultural price data from the years 1259-1400. The prices of wheat, barley, oats, beans, peas, and rye reach a relative minimum in the second year of the cycle, an absolute maximum in the fourth year of the cycle and an absolute minimum in the tenth year of the cycle before recovering in the final year of the cycle and the first year of the new cycle. There does appear to be a rather obvious and consistent trend in prices over these eleven year periods. Jevons discovers that the data (English wheat prices from 1595-1761) available to him in the Adam Smith’s The Wealth of Nations (1776) confirm similar although less marked trends in agricultural prices.

Jevons does not discount other significant factors that might cause the rather predictable nature of these business cycles. Technological advancements, wars, and other factors independent of agricultural and weather cycles can and do exhibit great influence over the economic well being of a nation. Also consumer confidence or a lack thereof could cause significant variations in spending and employment. However, Jevons believes that these consumer attitudes may also be related to the sunspot theory and the corresponding droughts and bumper crops which may result. “If, then the English money market is naturally fitted to swing or roll in periods of ten or eleven years, comparatively slight variations in the goodness of harvests repeated at like intervals would suffice to produce those alterations of depression, activity, excitement and collapse which undoubtedly recur in well- marked succession.” Jevons believes that if it were possible to accurately predict the sunspot cycle and the corresponding bumper crops and droughts then it would also be possible to predict impending economic crises.

In the second essay “The Periodicity of Commercial Crisis and Its Physical Explanation” (1878) with “Postscript” (1882) W.S. Jevons continues his study. In this essay he attempts to find empirical evidence to support his claim that business cycles follow predictable patterns which can be tied to the length of the sunspot cycles. Jevons claims that the relationship between weather patterns and business activity display a stronger relationship in primarily agrarian societies such as India and Africa. This claim makes this subject more meaningful in studying the relationship between weather patterns and economic activity in arid and semi- arid lands.

One piece of empirical evidence which W.S. Jevons believed would strengthen his sunspot business cycle theory actually has weakened this theory somewhat in retrospect. “There is more or less evidence that trade reached a maximum of activity in or about the years 1701, 1711, 1721, 1732, 1742, 1753, 1763, 1772, 1783, 1793, 1805, 1815, 1825, 1837, 1847, 1857, 1866. These years marked by the bursting of a commercial panic or not, are as nearly as I can judge, corresponding years, and the intervals, vary only form nine to twelve years. There being in all an interval of one hundred and sixty five years, broken into sixteen periods, the average length of the period is about 10.3 years.” Jevons points out that it is reasonable for the business cycles to vary somewhat in duration as it is reasonable to expect that there will be different lags between droughts and economic downturns based on inventories available and on the variations in trade patterns and ability to obtain imports quickly.

Potentially the most troubling conclusion that Jevons reached was that a sunspot cycle and the corresponding changes in agricultural yield and national productivity would follow a predictable pattern of approximately 10.3 years. Most astronomers now believe that the sunspot cycle does indeed last approximately 11.11 years which is somewhat troubling and is something that Jevons’ son attempts to address. This potential difference in sunspot duration is a primary reason this subject has not been studied as much as might be expected. However the findings of García-Mata and Shaffner provide some credence to Jevons’ theory. “Summing up, we can say that from a statistical point of view there appears to be a clear correlation between the major cycles of non-agricultural business activity in the United States and the solar cycle of 11+ years.” These authors also claim that it is reasonable that there could be some variation in the duration between sunspot cycles and that there is evidence that these cycles do correspond with business activity.

Christopher Scheiner's 1626 representation of the changes in sunspots over time (1630, recordings
from 1611). Scheiner, a Jesuit astronomer, eventually published the definitive work of the 17th
century on sunspots, in which he accepted Galileo’s argument that sunspots "move like ships" on
the surface of the Sun. Scheiner and Galileo agreed that sunspots counted against the Aristotelian
doctrine of celestial incorruptibility. Earlier Jesuits had been open on this point. Clavius argued
for the corruptibility of the heavens after the nova of 1572. Scheiner here publicized the fact that
the Jesuit theologian Robert Bellarmine had argued for the igneous nature of the stars and the
corruptibility of the heavens even before 1572 on the basis of biblical exegesis and the tradition
of the Church Fathers. Cardinal Orsini paid for the printing of this lavish work (Rosa Ursina - The
Rose of Orsini, 1630).

The third essay on sunspots and the business cycle was entitled “Commercial Crisis and Sun-Spots Part I” (1878) and “Part II” (1879) completed W. S. Jevons thoughts on the relationship of weather and business activity. In this essay he continues to discuss the existence of a solar cycle of 10.45 years as being wholly consistent with his findings and being a better predictor of economic variables than the now widely used duration of 11.11 years. Despite this potentially unfortunate conclusion Jevons elaborates on the potential relationship between solar and weather cycles and economic activity. He concludes that solar patterns should be studied to determine if a causal relationship does indeed exist between solar patterns and economic activity. If so, then policies should be enacted to reduce the magnitude of the contraction/recession parts of the business cycle. Jevons further elaborates on the importance of the solar cycle on consumer confidence and spending. “From that sun which is truly ‘of this great world both eye and soul’ we derive our strength and our weakness, our success and our failure, our elation in commercial mania, and our despondency and ruin in commercial collapse.” Jevons also finds more empirical evidence that corn prices in Delhi reach maximum and minimum in a similar eleven year pattern which has been exhibited in Europe. Once more this theory seems much more applicably to arid and semi-arid regions such as India.

Sunspot illustration from Scheiner's Rosa Ursina, 1630.

William Stanley Jevons’ son H. Stanley Jevons continued his work on sunspots and published “Changes at the Sun’s Heat as the Cause of Fluctuations of the Activity of Trade and of Unemployment” in Contemporary Review in 1909. He reissued it in a monograph entitled The Sun’s Heat and Trade Activity (1910) in which he further examined and elaborated on the subject. H. S. Jevons believed that his father had some excellent ideas in relating the sunspot theory to the length of business cycles although he does acknowledge some of the criticisms which have been leveled at the work W.S. Jevons did. He states that the sun’s activity has some effect on economic outcomes and while it is not the only variable which should be considered when formulating economic policy it is worth considering when formulating economic policy.

H.S. Jevons acknowledges that his father was in error when he claimed that he solar cycle would only last approximately 10.45 years. He claims that W.S. Jevons attempted to oversimplify his findings and he ignored some events which created economic booms and busts which had nothing to do with arid land’s agricultural productivity. This is what led him to the false 10.45 year business cycle predictor. However he found that wheat production in the United States displayed significant variation during the nineteenth century and reached its peak approximately every 11.11 years. He found a direct relationship between solar activity and wheat production in the United States. H.S. Jevons believes that the eleven year sunspot cycle is actually a combination of three shorter sunspot cycles which were just over three years in duration. There would be a period of drought approximately every 3.5 years and a period of cold damp weather approximately every 3.5 years. This great harvest would precipitate a trade boom according to Jevons. He finds data that suggest the production of pig iron and agricultural produce in the United States were closely related and followed the sunspot cycle closely. He also states that on occasion the business cycle will only correspond with two of these shorter sunspot cycles explaining the variation in business cycles between seven and eleven years. This can explain the error that W.S. Jevons did not understand about the variation in the length of business cycles. H.S. Jevons provides several suggestions as to how this information about solar activity can be useful. He believes that if output and therefore trade can be expected to decline in the near future that there should be wage cuts to attempt to ensure full employment. This suggestion is not reasonable today but if we are going to engage in interventionary fiscal and monetary policy the potential to predict shortfalls in productivity and potentially consumer confidence can have meaningful implications for expansionary monetary policies being enacted. This is particularly useful if there are actual psychological ties between solar activity and consumer’s attitudes which sounds far fetched but may occur. Jevons also recommends less domestic reliance on crops would reduce the variation in economic prosperity. While crop production is still important in many arid and semi-arid lands, this is not as meaningful to the economy as it was when Jevons wrote.

Sunspots - The Real Cause of Higher Grain Prices | Tom McClellan

Tom McClellan (Jul 27, 2012) - Sunspots are a big driver for wheat prices. Various pundits are putting out stories blaming the drought in the plains states on global warming [...] A better explanation for the drought, and the ensuing spike in grain prices, is that this is all part of the normal 11-year sunspot cycle. But to find that relationship in the data is what the story is about. The first point to understand is that sunspot activity has now been scientifically linked to changes in cloud formation. When the sun is more active, the charge particles streaming out from sunspot activity help to sweep away cosmic rays that might otherwise hit earth's atmosphere, where they play a role in cloud formation [... | HERE + HERE] Once you get past that more difficult scientific hurdle of understanding that cosmic rays and clouds are related, it is pretty easy to understand that less cloud formation is related to less precipitation, and thus poorer growing conditions for rain-irrigated crops. That is what we are seeing with this year's drought, and it has been pushing up grain prices accordingly. Looking across the last hundred years of price data on wheat, it can be difficult to see the relationship between the sunspot number and wheat prices. Part of this comes from the fact that there are other factors which sometimes act upon crop yields and thus grain pricing. But a big factor is that the units we use to measure wheat prices, i.e. US dollars, can vary themselves, causing the relationship with sunspots to sometimes be disguised by what the dollar itself is doing. 



If we look at the history of these two sets of data before the modern era of floating currency exchange rates, we can better see how they were correlated. This chart shows raw wheat prices, un-adjusted for the value of the dollar. The sunspot number data is shifted forward by 2 years to reveal that bottoms and tops in the sunspot number tend to be followed a couple of years later by bottoms and tops in wheat prices. This relationship got into some trouble in the middle part of the chart, when President Roosevelt's New Deal price fixing artificially inflated wheat prices. The intention in the 1930s was to benefit farmers by keeping wheat prices up. That effort switched during WWII to the government putting a cap on all prices, including wheat, to support the war effort. Rationing of food, fuel, and other items took over for market forces. Additional trouble came in the 1970s, when the Arab Oil Embargo pushed up oil prices in 1973-74, reducing acreage under cultivation. Then later in that decade, the rising value in the dollar pushed down the dollar price of most commodities compared to prices in other currencies. So using dollars to see the normal cyclical relationship in price data became problematic.

All of this explanation brings us (finally!) back to the lead chart above. In [the above] chart, I have adjusted the dollar price of wheat, multiplying it by the US Dollar Index, which was created back in 1971. This mathematical step produces a unit-less measure of the value of wheat by factoring out the dollar's movements. Doing this allows us to better see how the peaks and troughs in wheat prices have been related to the sunspot cycle. I want to emphasize again that the sunspot number is shifted forward in that chart by 2 years, to reveal its leading indication for how wheat prices will behave. The conclusion from this is that the upward move in the value of wheat right now is just following the swoop upward in the sunspot number that began in 2009. We should expect to see generally rising prices for wheat and other grains until about 2 years after the sunspot cycle has peaked, a peak which has not even happened yet.

On the Insignificance of Herschel’s Sunspot Correlation | Jeffrey J. Love

William Herschel started to examine the correlation of solar variation and solar cycle and climate. Over a period of 40 years (1779–1818), Herschel had regularly observed sunspots and their variations in number, form and size. Most of his observations took place in a period of low solar activity, the Dalton minimum, when sunspots were relatively few in number. This was one of the reasons why Herschel was not able to identify the standard 11-year period in solar activity. Herschel compared his observations with the series of wheat prices published by Adam Smith in The Wealth of Nations.In 1801, Herschel reported his findings to the Royal Society and indicated five prolonged periods of few sunspots correlated with the price of wheat. Herschel's study was ridiculed by some of his contemporaries but did initiate further attempts to find a correlation. Later in the 19th century, William Stanley Jevons proposed the 11-year cycle with Herschel's basic idea of a correlation between the low amount of sunspots and lower yields explaining recurring booms and slumps in the economy. Herschel's speculation on a connection between sunspots and regional climate, using the market price of wheat as a proxy, continues to be cited. However, according to a study of Jeffrey J. Love of the USGS the evaluation is controversial and the significance of the correlation is doubted:

Jeffrey J. Love (Aug 27, 2013) - Our finding is that Herschel’s hypothesis is statistically insignificant [...] All of the data Herschel discussed in his 1801 paper were collected prior to 1717, during the Maunder Minimum and long before his paper was published. His identification of five durations of time with few sunspots and inflated wheat prices and five other durations that might have had sunspots and which had deflated prices [Herschel, 1801, pp. 313-316] would be an unlikely realization of binary statistics, but it is not clear whether or not Herschel was inspired to state his hypothesis after inspection of these data. Having said this, Herschel acknowledged that predictions based on his hypothesis “ought not be relied on by any one, with more confidence than the arguments ... may appear to deserve” [Herschel, 1801, p. 318]. Today, we have considerably more data than were available to Herschel; these were collected both before and after he stated his hypothesis, and they can be used for both retrospective and prospective testing.  For  London wheat  prices  both before 1801 and, separately, after 1802, binary significance probabilities and Pearson correlations and their effective probabilities are [...] indicative of statistical significance. While solar irradiance may affect global climate, from our analysis of data of the type considered by Herschel, we conclude that historical wheat prices are not demonstrably useful for inferring past sunspot numbers, and, conversely, sunspot numbers are not demonstrably useful for predicting future wheat prices.

The Effect of Sunspot Activity on the Stock Market | Charles J. Collins

Charles J. Collins (1965) - Solar phenomena have been a source of scientific interest and investigation since Sir William Herschel, in 1801,found a correlation between sunspot activity and terrestrial phenomena [...] Modern science is giving considerable attention to solar phenomena in relation to disruption of the earth's magnetic field, to human health, and to weather, including rainfall, temperature, and cyclone frequency. The security analyst's interest is more directly concerned with the directly concerned with the effect of solar phenomena on business, and on speculation as evidenced by the ebb and flow of prices over our stock exchanges [This paper points] out one simple correlation of solar-stock market movements that will, fortunately, come to another test within the two or three years ahead. This is an apparent relationship between a recurrent phase of each sunspot cycle and an important stock market peak. The matter is of interest at this time for the reason that considerable attention is being given by students of the stock market as to when the broad advance that has been under way for a number of years is to reach a terminal point. This sunspot correlation, as discussed below, may throw some light on the subject. Briefly stated: It appears that an important market peak has been witnessed or directly anticipated when, in the course of each new sunspot cycle, the yearly mean of observed sunspot numbers has climbed above 50.

[...] Over the 94-year period under review, there were seven completed sunspot cycles, and it appears that an eighth was completed and a new cycle was started in 1964.During these eight cycles, not onlywas an important stock market peak concurrently witnessed (1881, 1892, 1916, 1936,1946, 1956)or directly anticipated (1906, 1929) by the above-50 count in sunspots, but, in four instances (1881, 1916, 1929, 1936), the designated peaks also marked the extreme or secular peaks for the entire sunspot cycle. The year 1890 seems an exception. In May of that year, the stock index reached its high of 5.62. In August 1892, the 5.62 level was again attained and, as concerns the yearly mean of the monthly stock indexes, the year 1892 peaked at 5.55, as compared with 5.27 for the year 1890 [...] In other words, in six instances, important stock market peaks and the sunspot climb above 50 came the same year, the two exceptions being 1906 and 1929. As to the 1906 exception, it will be noted, from the monthly range stock market chart, that the market peaked in January of that year, with December 1905 not far behind the January 1906 peak.

From a study of stock market history in relation to solar phenomena, a second theorem may be adduced: In each solar cycle, the largest stock market decline, in terms of percentage drop, comes after the sunspot number, on an annual basis, has climbed above 50. In the light of the foregoing observation, the 94 years of sunspot activity under review seems to occupy a rather narrow latitude for dogmatism. Thus, the preceding remarks should not betaken as a definitive prognosis of pending stock market behavior. Instead, they present a rather interesting correlation that has existed for a period of years between sunspot activity and major market peaks. Ergo, since the solar cycle is now at a point germane to this correlation, it seems worthwhile to present the previous relationship and await events, not without interest, of course, but mostly in the spirit of an enquiring attitude.

Originally printed in Financial Analysts Journal, November-December 1965; reprinted in Cycles Magazine in March 1966, and again in Cycles Magazine, Vol. 40, No. 3, September/October 1989]; editor's postscript of the 1989 reprint: "It is interesting to note the relation between above-50 crossingsand the stock market since 1965. In July 1966, the mean sunspot number moved above 50. The stock market shortly thereafter plunged in a major correction. In January 1978, the mean sunspot number again went above 50. The stock market, which had been in a downtrend, continued into a bottom after this date. In October 1987, the mean sunspot number went well above 50 to 60.~ and the 1987 crash followed. The mean sunspot number will next rise above 50 in about 1998."

The Sunspot Cycle and Stocks | Robert R. Prechter, Jr. and Peter Kendall

Robert R. Prechter, Jr. and Peter Kendall (2000) - Some effects from solar radiation are well documented. Sunspots disrupt satellite systems, radio transmissions and electric power grids. In the realm of mass human activity, the sun’s role has been a source of speculation since the dawn of civilization. In 1926, Professor A. C. Tchijevsky traced the sunspot activity back through 500 B.C. and found that it produced nine waves of human excitability per century. “As sunspot activity approaches maximum,” Tchijevsky found, “the number of mass historical events taken as whole increases.” [...] the Wave Principle and unconscious human herding behavior as a function of the human limbic system, which is the gatekeeper of emotion within the human brain. However, the limbic system is not necessarily independent of outside forces. As the radiating center of our solar system and the wellspring of practically all the energy on the planet, the sun is certainly an intriguing contender for some degree of external mass mental influence.

Why does the stock market typically peak before sunspots do? One very plausible explanation is that the collective tendency to speculate peaks out along with the rate of change in sunspot activity. If sunspots affect humans’ positive-mood excitability, that appears to be the point of maximum effect. When we explored this possible explanation, we found something additionally interesting. 

The figure above shows that as the solar radiation thrown off by the sun increases to a maximum rate (shown by our optimized 39-month rate of change in sunspot numbers), the human urge to speculate in general hits a fever pitch. Two months after the rate-of-change peak in 1916, the stock market established an all-time high that was not materially exceeded until the sunspot count was accelerating again in the mid-1920s. The next rate-of-change peak in October 1926 preceded the final stock market high by a full three years, but the speculative fever that accompanied the Florida land boom ended almost coincidentally, about two months earlier. The next peak was a double top that finished in February 1937, one month before a major stock market high. In 1947 and 1967, the rate of change peaked within 13 months of major stock peaks. In 1957, the peak coincided with with the all-time high in the advance-decline line, which stands to this day. The September 1979 peak was four months before a century-long high in precious metals prices. The August 1989 peak accompanied the all-time high in the Nikkei and the end of a big real estate boom in California and Japan. Since scientists’ grasp of the sunspot cycle is based on empirical observation rather than an understanding of what causes it, there is no way to verify that a rising rate of sunspot activity is behind these outbreaks. However, the speculative fall-off in the wake of every peak since 1916 is itself strong evidence of an effect. The latest peak rate of change came in December 1999, and that sets up a test. Will this peak in sunspots mark the end of the greatest mania in the history of the stock market? 

"Lower sunspot cycle maximums portend the largest bear markets."

 

 

"Shortly before a sunspot cycle hits bottom, stocks turn up." [Chart HERE]

Solar and Economic Relationships | García Mata & Shaffner

Carlos Garcia-Mata & Felix Ira Shaffner (1934) - It is common knowledge that people from all walks of life and every station of society participated in what is now generally agreed was - considering the number of persons and transactions involved - the greatest speculative mania of modern times. The bursting of this speculative bubble at the end of 1929 affords an excellent opportunity for something analogous to an experiment on the correlation of turning points in solar and speculative activity. Stock prices had experienced an extraordinary rise from a level of around 100 in 1924 to approximately 320 in the first half of 1929.

[…] With this in mind, we compared monthly data of speculation in 1929 with variations in solar phenomena for the same year […] In the upper part of the chart the solar-radiation curve is plotted upside down to help visualize the inverse correlation. Another comparison between business and solar data was made employing an index computed since August, 1924, by the Mount Wilson Observatory. This is an index of a part of the solar spectrum, the ultraviolet rays, which, it will be remembered, vary within a much wider range than the total solar radiation curve. This index was reduced to a 12-month moving average to make it comparable with the rest of the chart. Although the period is so short that nothing statistical can be deduced, the existence of a direct correlation with the business curve is apparent […] For an index of American speculative sentiment, we chose Professor W.L. Crum's index of industrial stock prices, known as “Barron's Averages, because they are constructed to portray the speculative movement of stock prices rather than the trend of investment prices.” 

[...] A glance at the chart will show a striking similarity in the date of the turning points. Furthermore, contrary to expectations, the behavior of the two curves during the whole year is similar. The lowest prices for common stocks in the New York and London Stock Exchanges were reached in the first half of July 1932 [...] The [third] chart shows the curious fact that the recession in the last quarter of 1932 is also visible in the solar curve. And it is interesting to note that the solar curve makes a second low in February, 1933, turning up again in the following months. Although this is a fact, too much should not be expected of comparisons for the year 1933 because, except for clear solar changes which are sudden and which can be associated with the turning points, it is too much to hope for an exact month-to-month correlation. In the years in which the speculative curves moved steadily up or down, such as in 1930-31 and previous to 1929, no clear moth-to-month relation has been found between solar and speculative short swings, except for the seasonal movements of the speculative curve in the down swing, which perhaps can be associated with the similar seasonal variations of the solar-terrestrial physical curves such as magnetic activity and aurora borealis.