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Traders Tales
by Ron Insana
(John Wiley & Sons, Inc., 1996)

Nearly every trader on Wall Street has a system for beating the market. Some traders verse themselves in the fundamental realities of a particular company’s business. They review earnings reports, balance sheets, interest rates, and other aspects of business that could affect a company’s stock price. Other traders rely on the use of charts that illustrate a stock’s price movement over time. These technical analysts also use charts to predict the future. Still others use complex quantitative and statistical models for trading. Finally, the “rocket scientists” of Wall Street use rather arcane proprietary methods to help them trade: oscillators, speeds lines, Gann angles, spirals calendars, Elliott Wavers, or other indicators of market behaviors.

Then there is Arch Crawford. Arch is a market newsletter writer who makes his trades based on the position of the planets and other astronomical phenomena. A quirky calling to some. But to Arch, the correlation between the movements of Sun, Moon, Stars and financial markets is there for all to see, if one only knows where to look in the cosmos.

From his own description, Arch was a some what precocious child, always interested in numbers extracting square roots for fun in his younger days. One day little Arch saw a page of numbers in the newspaper that piqued his curiosity. He was told they were stock prices and that they went either up or down from day to day. Most important, he was told that he could make money from the daily fluctuations in stock prices.

Arch asked incredulously, “You mean I can make money without working?” He was hooked. (He has since found out the art of investing does, indeed, take a lot of work.) So, at the tender age of twelve, Arch Crawford began keeping track of stock prices. He became an avid student of the stock market, reading Bernard Baruch’s My Own Story. He also read great tales of moneyed men, like The Robber Barons and How I Made $2,000,000 in the Stock Market.

Arch’s mind raced with the possibilities. He began watching his first stock faithfully every day. He charted the course of Allegheny Corporation, an amalgam of Depression-era railroads that had seen its share of troubles in recent years. Arch tracked the stock, watching it drop to $7. Bounce to $10 or $11 and hold steady over time. It was building a base for a big breakout to the upside, Arch surmised, employing the jargon of a budding technician.

He made his first purchase of Allegheny at $7 a share. It promptly went to $4. As they say on Wall Street, if you like it at seven, you’ll love it at four. So, Arch doubled up on the stock at $4. After waiting a year for the stock to skyrocket, Arch had had enough. He sold his entire portion at $11. He only made a little money, but he was wedded to the market for life.

Some years later, after finishing high school and spending a little time in college, he dropped out of the University of North Carolina and went on to work for Merrill Lynch in Raleigh. There he furthered his appetite for stock market investing, marking a chalkboard with fresh stock prices as the ticker tape came through the office. He became an assistant bookkeeper and eventually made his way to Merrill New York office. It was in New York where Arch really learned how to chart the market.

He served as the first assistant to Robert Farrell, a Wall Street legend who was among the first chartists to bring a certain respectability and intelligence to the field of technical analysis. Along with men like Edson Gould, Joe Granville, and a few others Farrell ranks among the most prominent chartists Wall Street ever produced.

While Crawford learned the ins and outs of technical analysis from the revered Farrell, his insatiable curiosity about a host of topics was piqued by an article that appeared in The Wall Street Journal back in 1963. Profiled in the article was one Lieutenant Commander David Williams, who had written an exhaustive study of the linking between Wall Street and the cosmos. It was called AstroEconomics [1955], later expanded to Financial Astrology [1982]. Soon after reading that piece of work, Arch discovered a 1940’s pamphlet entitled Stock Market Prediction, written by Donald Bradley. The booklet ascribed values to the degrees of separation in planetary alignment. The values were related back to the behavior of the stock market.

By this time, Arch too, had coincidentally developed more than a passing interest in astronomy and astrology. He owned books describing planetary positions dating back to 1890. As he became more familiar with the history of the market, he found that various planetary positions and alignments frequently coincided with certain types of market behavior. Non-threatening Harmonic angles coincided with stock market tops. Eclipses, and the squaring of planets, and other more threatening cosmological developments, often coincided with extreme volatility in stock prices. These discoveries led Arch to a market method that combined the strict practice of charting stocks with the less precise science of charting the stars.

Interestingly enough, today Arch looks at the statistical correlation between certain cosmological phenomena and significant market events. In other words, he doesn’t profess to know why certain extraterrestrial events lead to market euphoria or distress. He only knows that they are somehow linked. When Arch sees a positive astrological development on the horizon, so to speak, he will buy stocks. When more ominous celestial activity occurs, he exits the market.

While he doesn’t profess to know why the stars influence the street, he does note that the work of John H. Nelson comes closest to offering a causal relationship between the swirling of the heavens and the gyrations on Wall Street. Nelson’s work attempts to show that my looking at the movements and alignments of the planets one can accurately predict sunspot activity. At this point, no doubt, your eyes are starting to glaze over. But, don’t fall asleep yet.

Some cosmological theorists have speculated that sunspot activity alters human behavior on earth, causing bouts of mass euphoria or anxiety. Some believe that happens because sunspot activity disrupts the normal electricity in the earth’s magnetic field. And that disruption of the ionosphere just might lead to bouts of collective euphoria or despair, two phenomena which often visit themselves upon financial markets.

In any event, it seems that some time, Arch’s cosmological leanings have left him on terra firma when it comes to the stock market. He is frequently among the most highly rated market newsletter writers on Wall Street. He has made some great calls on the market and he has also been wrong as frequently.  [ed. note: If it was "as frequently", he wouldn't be "highly rated"] But like the girl with the curl, when he’s right, he’s very right, as the next anecdote shows.

A Little Lunacy. In 1987, the “harmonic convergence” took Wall Street by storm. This harmonic convergence was a long-awaited celestial event that brought five of the solar system’s nine planets into their tightest alignment in over 800 years. The stock market, coincidentally or not, hit an all time high on August 25, 1987 at 2722. It would be the highest level the market would reach before crashing by 1000 points over the next two months. The market’s vicious decline culminated in a 508 point drop on October 19,1987. That was Black Monday, as it is now remembered on Wall Street. The harmonic convergence, a most welcome event, curiously struck when Wall Street was in the midst of a collective “High.” The euphoria peaked as the convergence took place. As Mickey Rourke’s character once said in the movie Diner, “It’s Ripley’s.”

Arch Crawford recalls that on August 24, 1987, the Sun, Moon, Mercury, Venus and Mars were in “one third harmonic (triangle) to Jupiter.” They were locked in the tightest planetary conjunction in at least 800 years, maybe longer, Arch reckons. According to Crawford’s star charts, these five bodied will line up within 5-10 degrees of one another. That happens about every 396 years. But in 1987, the five orbs were within 2 degrees of one another, an unusually tight conjunction. It was an event that people the world over gathered to herald. There were communal rituals from California to Calcutta, as terrestrial beings communed with the cosmos. It was a period marked by a collective feeling of enlightenment and happiness.

The convergence also marked a peak in the euphoric mood on Wall Street. Armed with both terrestrial and extraterrestrial trading tools, Arch knew that the harmonic convergence represented a top in the stock market. On August 10,1987, Arch penned a prediction for a publication known as The O-T-C Stock Journal, a stock market newspaper in which he outlined his bearish bent, [ed. note: The article appeared on Aug. 24, the DJIA topped at noon on the 25th] recommending that investors exit the stock market ahead of an imminent crash. He told investors to buy treasury bills, gold, and stock index put options, options that would rise in value if the stock market fell. He called for the market to top with the advent of the harmonic convergence and crash shortly thereafter. It did. On October 19th the stock market suffered its worst day in the history of stock market trading.

It was easy to see it coming. All one had to do was look up at the sky.

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