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Using Chinese astrology to predict the stock market.


(Note: This article was first published in Januari 2000, on the NineStarKi list at Yahoo! Groups)



There is a correlation between the cycles we know from Chinese astrology, and the stock market performance.

Using data for the US stock market (Dow Jones Industrial Average) over the last 70 years the following relationship is found.

dj10.gif

This 10 year cycle shows the average stock performance according to the heavenly stem of the year.
We see that Yin and Yang Metal years, and Yin Fire years give declines, while Yin Wood years tend to rise spectacularly.
On average we have:

Year Gain/Loss
Yang Metal - 7.0 %
Yin Metal - 0.6 %
Yang Water + 5.3 %
Yin Water + 13.5 %
Yang Wood + 9.0 %
Yin Wood + 34.2 %
Yang Fire + 7.0 %
Yin Fire - 1.5 %
Yang Earth + 16.4 %
Yin Earth + 9.0 %



If we look at the Nine Star Ki years we find this:

dj9y.gif

We see a poor performance in 8 and 7 years and small rises in 6 and 5 years.
4, 3, 1 and 9 years show good rises.
On average we have:

Year Gain/Loss
9 + 10.7 %
8 - 1.1 %
7 - 1.1 %
6 + 7.3 %
5 + 3.9 %
4 + 19.7 %
3 + 11.4 %
2 + 7.9 %
1 + 17.8 %


If these correlations persist, we can expect the following performance for the next decade:


Year 4 Pillars 9 Star Ki Average
2000 -7.0% +10.7% +1.8%
2001 -0.6% -1.1% -0.8%
2002 5.3% -1.1% +2.1%
2003 +13.5% +7.3% +10.4%
2004 +9.0% +3.9% +6.0%
2005 +34.2% +19.7% +27.0%
2006 +7.0% +11.4% +9.2%
2007 -1.5% +7.9% +3.2%
2008 +16.4% +17.8% +17.1%
2009 +9.0% +10.7% +9.8%


Based on these numbers we can predict that the (US) stock market will not rise much
for the next three years (2000 - 2001 - 2002).
2005 looks very good, being a Yin Wood 4 year, the best possible combination.


Update Januari 2001:

Last year's prediction proved very accurate. Especially technology stocks were hit very hard, 2000 was a Yang Metal year, and Metal cuts Wood (technology, and all growth stocks in general, are strongly related to Wood element..).
For 2001 it looks hardly better. 2001 is a Yin Metal year which has given us an average performance of -0.6% in the past.
2001 is also an 8 year in Nine Star Ki. 8 years have also underperformed historically with a -1.1% average ..
So, according to Chinese astrology we are in for another flat to down year. The technology sector in general will remain weak because Yin Metal will bring further cut backs. We should start looking for bargains in this sector however (probably by next autumn), because the next four years will be Water and Wood, which will spark off a spectacular recovery.



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