Here are the Solunar model charts for U.S. stocks and gold updated through the first quarter of 2011.
Now’s a good time to review what information is and isn’t contained in these charts. There is no outlook for long-term trend in the solunar model. The model tells us only what is the seasonal tendency at a particular time. Example, the model shows weakness between January 7 and February 18 next year. Just because the model drops from close to 90 down to 40 doesn’t mean that a large drop is forecast. If stocks are in a long-term uptrend at that time, then the model’s result may be that prices go sideways then. We saw that in gold early this year. The model dropped from early January to late March. Gold did not drop, but it did take a break from it’s long-term up trend and have a sideways consolidation precisely within the time frame of the model. Therefore, the model is best used to understand what the seasonal forces at work at any given time are, but to also understand that those forces are not the only driver of prices. And, as I’ve said many times before, the model works amazingly for periods of time and then seems worthless at other times. But the consistent observation I’ve made over the years is that the model does seem to work best when markets are emotional. We’ve certainly have had plenty of emotion the past two years and the models have performed exceptionally well during this time.
click chart to enlarge
click chart to enlarge