October 23, 2009

"It's déjà vu all over again," Yogi Berra once famously quipped.

Berra later explained that his comment originated when he witnessed Mickey Mantle and Roger Maris repeatedly hit back to back home runs in the Yankees' seasons in the early 1960s.

Déjà vu was good enough for Berra's baseball analysis, but it's essential for astro-traders.

While we may not be able to replay the past exactly, and while, as the famous disclaimer goes, past performance is no guarantee of future results, it's nevertheless important for us to keep the past in mind as we do our current analysis and make our forecasts for upcoming market conditions.

In its most rigorous form this remembrance of things past takes the form of back-testing, when we closely examine specific triggers, astrological or non-astrological, and study what happened in the markets after they occurred, preferably making sure that our past examples come from bear markets, from bull markets, and from non-trending congested markets as well.

But even if our déjà vu experiences are a little more anecdotal and a little less controlled, they can still be useful as we look ahead in the markets. If we assess it properly, the past can at least give us a general idea of what the future may hold.

And what the past reveals can often be enlightening. Recently, for example, I was examining some upcoming planetary dynamics and trying to forecast their impact on U.S. equity prices. My study showed that a Full Moon is associated with an isolated top in the S&P about 59% of the time. While this is significant enough to factor into a trading plan, by itself it isn't enough to give me the confidence I need to enter a trade.

A Mars retrograde station, however, is an entirely different matter. My preliminary research revealed that a Mars retrograde station is associated with an isolated top in the S&P more than 85% of time. When I discovered that I immediately flagged my calendar.

As far as I'm concerned, a market trigger that's accurate 85% of the time is something that will carry considerable weight for me as I work on trading tactics. With those kind of odds in my favor, my confidence in my trading ability goes up considerably.

Even if it does seem like déjà vu all over again.