Sunspot Cycle is Diverging With the S&P Again; Sunspots to Make a New Low in March (NASA); Sun QE Ahead?

Source: NASA/MSFC gif, pdf chart
Expand your mind for this post. NASA's sunspot number prediction for March/2013 made a new intermediate-term low. It is also diverging with the S&P 500 again. The last time the sunspot cycle diverged with the S&P was between 2003-2007, when the Federal Reserve (led by Alan Greenspan) lowered the Federal Funds rate to a historic low of 1%. But, as you can see in the second chart below, the market eventually caught up with the sunspot cycle in the end by falling 57% from its peak in 2007 and bottoming in tandem with the sunspot cycle in 2009. Perhaps the main side effect from the prolonged divergence was the artificial, mispriced credit cycle fueled by fraud, which catalyzed the financial crisis and the biggest recession since the great depression. So maybe central banks can't fight the sunspot cycle.

For more info on how the sunspot cycle affects the economy, geopolitics, and the stock market, watch this CNBC interview with cycles analyst and market technician Charles Nenner from 2010. Simply put, the sun has a psychological effect on people's moods which can affect the global economy, geopolitical tension, and the buying and selling of shares. This makes sense given that the amount of sunlight affects the levels of serotonin in people's brains, which can cause depression (Discovery, WebMD, PubMed). When looking at trading and investing specifically, some people believe the sunspot cycle directly affects complacency in the stock market. So maybe the Fed should soak dollar bills in synthetic anti-depressants or St. John's Wort extract (interesting that a side effect is photosensitivity (Fordham, PubMed)) to "QE" the next downturn in the sunspot cycle.

Here is the S&P 500 vs. Sunspots chart I made today showing the new divergence.

(sources: stockcharts.com, solarscience.msfc.nasa.gov)

More Research:

Chart 101: Sunspot Cycles & Human History (MichaelMandeville.com)
Markets and sunspot cycles (FT Alphaville)
Solar activities and market cycles (Reuters Blogs)
Look To The Sky For Stock Market Clues (Forbes)
Sunspot Cycle and Stock Returns (CXO Advisory Group)
Trading The Sun (By John Hampson, SolarCycles.net)
Solar Minima And The Financial Markets (SolarCycles.net)
Sunspots, GDP and the stock market (Growth Dynamics, pdf)
Sunspots & Stocks (Time-Price-Research)
An Inquiry into the Effect of Sunspot Activity on the Stock Market (By Charles Collins at JSTOR)
Solar Flares, Sunspots: Do they Effect the Market? (on Collins' book at ADVN.com)

Comments

  1. great post. Last time the divergence lasted for quite a long period of time relative to this new divergence period that is quite recent. What do you make of this duration of divergence?

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  2. You are right. The difference is the sunspot cycle was already in down mode in 2003 and the market was at its low. This time the market is at the 2007 high with the sunspot cycle in its normal band. I think 2003-2007 was the most artificial market this world has ever seen with hidden markets mispricing credit risk and business activity with all of the cheap money. Now it's clearly a controlled market by central banks.

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  3. The financial system tried to game the cycle. The ABX Index (subprime mortgage index) ended up following the sunspot cycle after the market bottomed in 2003. So it took over for the S&P. http://www.sociotimes.com/images/ABX.gif

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  4. "New Ice Age to Begin in 2014"
    60 -- 200 -- 4,500 -- 100,000 year cycles have peaked.
    !,050 year cycle set to peak near the end of the century.
    4 cycles vesrsus one -- doomed, how soon, we are

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