information that I think you will find quite enlightening.
British Journal of Psychology. Vol 75(1), Feb 1984, 15-23.
"10 mood variables were related to 8 weather variables in a multidimensional study in which 24 male university students filled out a mood questionnaire over 11 consecutive days. The mood variables included concentration, cooperation, anxiety, potency, aggression, depression, sleepiness, skepticism, control, and optimism. The weather variables included hours of sunshine, precipitation, temperature, wind direction, wind velocity, humidity, change in barometric pressure, and absolute barometric pressure. Humidity, temperature, and hours of sunshine had the greatest effect on mood. High levels of humidity lowered scores on concentration while increasing reports of sleepiness. Rising temperatures lowered anxiety and skepticism mood scores. Humidity was the most significant predictor in regression and canonical correlation analysis."
We know that the weather can affect how we feel, or mood. And we know that this in turn can affect our desires and emotions. The effects of the weather or the news, as well as our accumulated experiences over time affect our perceptions. And our perceptions of value accompanied by our emotions affects our buying and selling decisions.
Therefore, we must ask this final question. Is there anything that affects the weather?
And once again, we know the answer to be 'yes'. I took the following notes from an encyclopedia under the subject "weather".
"Weather is an all-encompassing term used to describe all of the many and varied phenomena that can occur in the atmosphere of a planet."
"Weather phenomena result from temperature differences around the globe, which arise mainly because areas closer to the tropics, around the equator, receive more energy from the Sun than more northern and southern regions, nearer to the Earth's poles."
"Because the Earth's axis is tilted (not perpendicular to its orbital plane), sunlight is incident at different angles at different times of the year. In June the Northern Hemisphere is tilted towards the sun, so at any given Northern Hemisphere latitude sunlight falls more directly on that spot than in December. This effect causes seasons."
Note what is being referenced here. We have the "sun" and the rotation/tilt of the earth. A reference is made of "seasons", which is a direct result of the relationship between the earth and sun. What about the closest satellite to earth...the moon?
Well, we all know that the moon affects the ocean tides. So we know that is does have some influence over certain aspects of this planet. And there is also some mention that the moon may have some affect on plant life. Note these findings.
"Practical economic use of the lunar cycle has been going on for a long time. In tropical rain forest countries in South America and Southeast Asia, where most of the world's hardwood comes from, tree-harvesting contracts are linked to the phase of the moon. The trees are only cut down on a waning moon, as near to the new moon as feasible. This is because on a waxing or full moon, the sap rises in the trees and extensive sap bleeding attracts hordes of deathwatch beetles, which will devastate a crop. Awareness of this cycle means the difference between making or losing millions of dollars every year."
Does the moon also affect people? Consider this finding.
"At the University of Miami, psychologist Arnold Lieber and his colleagues decided to test the old belief of full-moon "lunacy" which most scientists had written off as an old wives' tale. The researchers collected data on homicide in Dade County (Miami) over a period of 15 years - 1,887 murders, to be exact. When they matched the incidence of homicide with the phases of the moon, they found, much to their surprise, that the two rose and fell together, almost infallibly, for the entire 15 years! As the full or the new moon approached, the murder rate rose sharply; it distinctly declined during the first and last quarters of the moon."
"To find out whether this was just a statistical fluke, the researchers repeated the experiment using murder data from Cuyahoga County in Ohio (Cleveland). Again, the statistics showed that more murders do indeed occur at the full and new moons."
We have now gone from the actual buying and selling of stocks and commodities back to what we can see is an influence from weather, which is influenced by the relationship of the earth, sun and moon. Now here is something that you should consider about these chains of events:
Notice that the sun/earth relationship produces weather 'cycles'. It produces also what we call the seasons. And we all know what affect weather and the seasons have on our commodities and those financial instruments that are directly and indirectly tied to it.
And we also noted again the reference to 'cycles' when dealing with the moon's affect on the earth and its population. When you consider the mentioning of these 'cycles', reflect on what you have noticed over and over again on your market price charts. You see prices moving up then down then up then down, over and over again. What you are seeing are the effects of 'cycles'. As a matter of fact, by applying some simple oscillators such as the Stochastic or moving averages, you can often see these cycles more clearly.
And just as we've worked our way back to find that there is not just once source, but perhaps several sources of initial effects that lead down the chain to our decisions to buy or sell, these multiple effects (cycles) combine resulting in the distorted cycle patterns we see on price charts.
It is hoped that by working back from the actual buying and selling to the effects that may lead to those final actions, you get a better understanding of the inner workings of market price action.
And as meteorologists have made great leaps in forecasting the weather by understanding the inner workings of weather, the market trader can also reach a point of making highly accurate forecasts of market behavior, enough so as to be able to increase ones odds of getting on the right side of most trades.
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