Full Moons, Market Bottoms, and a Secretive Trader’s Edge

Markets don’t run on numbers alone. They run on human emotion. And that’s why this works. The SPX bottomed today... calling it.

The first firm I worked for was named after a bunch of rocks in Europe.

Fitting, because a lot of the people there were just as stubborn as those rocks—especially when it came to anything that wasn’t value investing.

But the CEO saw things differently. He wanted someone who didn’t think like the rest. Someone who could trade alongside the one guy in the firm who consistently made money, year after year.

That trader was an enigma. He was secretive about his methods. I knew he used technicals to time trades and manage risk. But there was something else—something that made him excited on certain days.

One afternoon, I pressed him on it.

He smirked and said, “There are a few things that happen over and over again when markets bottom.”

He laid them out:

• A lot of market bottoms happen in March and October.

• Stocks tend to V-bottom. Commodities? They consolidate, base, then turn.

• And the last one is weird… full moons.

Seriously…

Turns out, he wasn’t the only one who thought so. Paul Montgomery, a respected market analyst, noticed that market bottoms often coincided with full moons.

Not because the moon controlled prices, but because it seemed to align with peaks in investor pessimism and panic selling.

Montgomery’s theory was simple: if fear and capitulation tend to max out around full moons, they might be a useful contrarian signal.

History backed him up—many major market bottoms had formed within a few days of a full moon.

The trader knew this.

He didn’t trade off moon cycles alone, but he kept them in mind.

It was just one more tool—like sentiment, positioning, and price action—that helped him see what others ignored.

My Own Opinion:

These patterns work when there is extreme fear and extreme offside positioning—when market participants are driven by raw emotion.

That’s it.

And there’s research on this, too. The University of Basel recently conducted a study analyzing trading strategies based on moon phases. Their findings? Implementing these strategies led to a 10.9% increase in returns in the $SPX 500 over a 10 year period of time.

Sometimes, the market is less about numbers and more about human nature.

So today, the market is up almost 2% currently. Selling put spreads is a great idea in this type of environment. Limited upside and downside but a few winners can fund some long options trades that we will be putting on soon…

How about those silver calls team?!?!

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Gold Just Hit $3,000

We’ve been long gold since October 2023 on a false breakdown signal. Then, when gold broke out in January 2024, I added more.

Before that, in July 2023, I doubled down and wrote a post called "Gold to $3,000."

Now we’re here. And I’m still long this trade—no idea where it ends up.

Ride the trend..

Current Sector Portfolio Weights

Enjoy your weekend everyone. AAO is having a great year but most importantly we are protecting our capital.

Also if you did not get a chance to see this one in yesterdays post. Check it out!

For more insights, join Steve Strazza and me live today as we break down key market trends, new opportunities, and—most importantly—how to protect your portfolio.

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