Fundamental news will dominate headlines next week, with Monday and Tuesday potentially being fulcrum sessions, as earnings season accelerates and key economic news is reported. Yet many chart watchers say the market may turn -- literally -- later in the week.
Against the intense backdrop of earnings and economic data (details below), it's notable that cycle watchers of varying disciplines are eyeing the latter part of the week as potentially having the biggest significance.
A subset of technical analysis, cycle watching is the practice of "looking at a chart, seeing a pattern that repeats and, next time it's due, resolving to pay more attention," says Peter Eliades, editor of
, a market-timing newsletter based in Petaluma, Calif. "If I showed you a chart and saw that every 22 weeks for the last three years the market reached a bottom, wouldn't you be looking for a bottom 22 weeks from the last one?"
Eliades was speaking hypothetically about 22 weeks (repeat:
), but he and other chart watchers say the implications of next week are quite literal.
For short-term considerations, April 20 -- Friday -- is a so-called Bradley turn date. Bradley turns are based on the work of Donald Bradley, an astrologer and author who pioneered the use of astrology as a predictor of financial markets in the late 1940s.
In a nutshell, the theory is that market actions are driven by crowd psychology, which can be affected by planetary alignment.
No method is infallible, and Bradley turns are better at calling the dates of turns rather than the direction. Still, Arch Crawford of market timing newsletter
recalls that Bradley turns accurately forecast major market bottoms in October 2002 and March 2003.
Crawford's own work, which incorporates lunar cycles too, also points to some potentially significant market developments next week. Most prominent are Saturn being in direct station (or a point of standstill) on Wednesday and Thursday -- which makes the atmosphere "usually contractive, cold and bearish," the veteran Wall Street astrologer says -- and the moon squaring with Uranus on Friday in conjunction with options expiration, which could lead to "radical and unexpected changes."
Those familiar with Crawford's television appearances are probably not surprised to see a bearish forecast; by his own admission, he hasn't made a major "buy" call since late 1999, when the dividend yield on the
fell below 2%.
That said, he's looking at a potential short-term buying opportunity on April 23, based on Mars squaring with Venus and being in opposition to the March 3 lunar eclipse. Such alignments "tend to be market lows or a big down into a low," he says.
It may sound like voodoo, but perhaps less so when you consider the moon controls the tides and human beings are more than 90% water. Moreover, even in this age of computer-driven program trading, many classically trained investors do pay attention to market astrologers.
Crawford has been market timer of the year more than once and I appreciate his perspective," writes
contributor Robert Marcin of Defiance Asset Management in an email exchange.
Asked whether he cares about Crawford's forecast for a major downturn next week, Marcin quips: "If the market starts to roll over I do. If not, I don't. We will see."
For a (very) long-term perspective, meanwhile, Eliades follows a cycle that connects major market bottoms from 1907, 1932, 1958, and 1982, as
detailed here. Those major bottoms are connected by 9,003 calendar days (24.66 years); 9,003 days from the Aug. 12, 1982 bottom equates to April 6. Because of the Good Friday holiday, Eliades is using April 5-9 as the dates for 2007. (
OK, so that's not actually next week, but in a 25-year timeframe it's close enough for conversation's sake.
Although "all the prior dates were important if not historic bottoms, you will have to go quite some distance to convince me or anyone else that we're facing such a potential bottom here," Eliades writes. "I'm theorizing because the market has been up so long without a 10% decline, this theoretical bottom might turn out to be a top."
Perhaps that's a great indication of market sentiment -- that someone following a 100-plus-year cycle that is calling for a major bottom is convinced it has to be a top.
Whatever the case, "next week is clearly a turn date for an awful lot of these
cycle watchers, so I suspect there will be something that happens in a big way," says one veteran technician, noting the stock market isn't alone in being (theoretically) subject to the whims of the calendar or planets. "The turn could be in gold or bonds or copper, or oil, or stocks or the dollar."
For the record: Gold hit a one-year high Friday while the dollar hit a two-year low; copper is at a six-month high, while the 10-year yield is at its highest level in two months.
Earnings season begins in earnest next week with financial giants
slated to report on Monday. The week also kicks off with a trio of
speakers -- regional Presidents William Poole, Charles Plosser and Richard Fisher at separate events -- as well as April retail sales and the Empire State Index.
Tuesday's economic news includes the consumer price index, housing starts and industrial production/capacity utilization data, as well as a speech about currencies by New York Fed President Timothy Geithner.
The earnings parade features tech heavyweights
Also on the docket Tuesday are Dow components
Johnson & Johnson
, as well as financial outfits
Wednesday brings results from
, as well as the Energy Department's weekly oil inventory report.
The economic calendar picks up again Thursday with data on jobless claims, the index of leading economic indicators and the Philadelphia Fed survey.
Meanwhile, the earnings juggernaut rolls on with results from the likes of
Advanced Micro Devices
, as well as financials
Bank of America
Friday's highlights include Dow components
, as well as
here for a more complete list of next week's scheduled earnings.)
Aaron L. Task is editor at large of TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He appreciates your feedback;
to send him an email.