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ECONOMICS AND ESOTERICA FOR A NEW PARADIGM

We’ve never seen anything like this summer:
 An interview with Arch Crawford

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from The Daily Crux
July 2010
www.thedailycrux.com

“Dear Daily Crux reader,
This week’s interview concerns one of the most unusual subjects in the financial markets. Because it’s time-sensitive, we aren’t publishing at our normal time. Our guest this week is an investment advisor who has been writing his newsletter for over 30 years. He was named the #1 market timer for 2008 and 2009 by the Hulbert Financial Digest, which ranks over 500 investment newsletters. His name is Arch Crawford.

He has been writing his Crawford Perspectives advisory since 1977 – and has been profiled in The Wall Street Journal, The New York Times, Forbes, Barron’s, Kiplinger’s, and dozens of other publications around the world. He’s shared his insights on CNBC, the Nightly Business Report, Good Morning America, and ABC’s 20/20. Crawford is on record for predicting some of the most important events in recent history, including the 1987 stock market crash, the beginning of the gold’s historic rally, and the September 11 terrorist attacks.

And about that “unusual” bit? Arch Crawford uses astrology to time his market calls. He recently caused a stir by making some shocking predictions for the near future… beginning as early as this Friday, July 30th. Skeptical? So are we… which is why we sat down with Mr. Crawford to get his controversial take. Read on for the full story. Good investing, Justin Brill,
Managing Editor, The Daily Crux

–––––––––––––––––––––––––––––––––––––––––––

The Daily Crux Sunday Interview:
We’ve never seen anything like this summer:
An interview with Arch Crawford

The Daily Crux: Mr. Crawford, you’ve made a name for yourself as one of the best market timers over the past 30 years, using a combination of traditional technical analysis and some rather unusual techniques. For readers who may not be familiar with your work, can you tell us a little bit about yourself and how you developed your unique approach to the markets?

Arch Crawford: Well, I first got interested in the stock market when I was about 13 years old and I put my first trade on when I was 14. I was keeping up with all the stocks under $10. I started with stocks in the As and Bs. I never got through the Cs because there were a lot of them way back then. 

After high school, I went to the University of North Carolina studying math and physics. I was spending too much time over at the library looking up stock market stuff and my grade point average began to suffer. So I figured before my grades dropped through a “major support level” – to use a market analogy – I should just go ahead and do what I really wanted to do. So I left there and went to work for Merrill Lynch in Raleigh, North Carolina.

My job was marking stock prices up on the chalk board.

I liked it so much, I said, “This is great! This is what I want to do with my life. Send me to New York!” They just laughed at me. But one of the brokers there got me the book Technical Analysis of Stock Trends by Edwards and McGee, which was sort of the bible of that kind of analysis. Merrill Lynch used to get the trend line charts each week. They would have charts for about 600 stocks, and they would come in every Monday for the previous week. I would get them and draw all the lines of support and resistance and trend lines and all that. Then I would look at them the next week and see if they did what I thought they would do, and if not I’d try to figure out why.

So I was sort of self-taught in technical analysis. About six months later I thought I had learned enough, so I told Merrill I was going to quit, and move to New York to look for a job. They said, “Don’t do that. We’ll transfer you.” 
So, when I was 20 years old, I got on a bus and went to New York City. I think they upped my pay from about $55 a week to $70 or $75 a week. I went right up into the research department and I was actually drawing the charts for their fundamental analysts. Those analysts didn’t have any interest in technicals, but they wanted to see weekly charts of their stocks back years and years. I kept them up to date so they’d have an idea of the general market direction of the stocks they followed. There were 45 industry specialists, so that was about 400 charts in all. That alone would take until about noon on Wednesday each week.

At nights, I made friends with the Merrill Lynch librarian and would spend until midnight running 10-day moving averages on every figure coming out in the Wall Street Journal and Barron’s, learning which ones were too similar and which ones were unique in the type of information. The technical guy at Merrill Lynch at the time was Robert Farrell. He later became the most famous and best-regarded technical analyst on Wall Street. He saw that I was really interested in working hard at it, and he took me on as his first-ever assistant. I worked there with him for  three and a half years. In those days, technical market analysis was regarded a lot like astrology is today. They stuck our office down a long, empty hallway that dog-legged off to the left. It was down past the telephone switching room. If you didn’t know we were there, you sure wouldn’t come looking for us.

When I had been there for a couple of months, I made a call that there would be a crash the next year – in early 1962 – and I said if the pattern I saw stayed symmetrical, the top would be in the middle of December 1961. Well it did stay balanced out, and the market topped on the 13th of December. It continued to trace out a head and shoulders pattern, and it broke down through the neckline of the pattern on the day that Kennedy made the steel companies roll back a price increase. That’s what actually caused the crash. It was never an economic crash. It was just political – Wall Street punishing Kennedy. [Laughter]. I made a bunch of money on put options on that crash. After I left Merrill, I started my own business as an advisor. Later I was a trader, and I was a stock broker for a short time, a year and a half maybe. I never wanted to be a stock broker. Then I started my newsletter in 1977.

Crux: That puts your newsletter up there as one of the longer-running ones today…

Crawford: Well, Richard Russell and Joe Granville have the two oldest. And I’m not the oldest of the generation after that, but there aren’t too many that have been around longer. Harry Schultz, Jim Dines, Ian McAvity were before me. I think Robert Prechter started his letter about the same time as mine.

Crux: I believe he started in 1979…

Crawford: Yeah, just a couple of years after mine. Coincidentally, he was actually one of Robert Farrell’s assistants as well. That was about 10 years after I had left, and they had gotten much bigger by then. Not too long ago – I think it was in January – Bob Prechter did an interview in London, and they asked him who he thought was the best predictor in the market.  He said, “Arch Crawford probably has the best 30 year record,” right at the end of his segment. That was very kind of him.

Crux: Prechter is known for making some pretty big market calls as well… so that’s a nice compliment. Can you tell us how you developed some of your more unique indicators?

Crawford: Actually, I can trace it back to the exact day in 1963. On the day before my birthday that year, the Wall Street Journal came out with an article on people who use astrology in the stock market. That’s where I got the idea from. So I went and met all of the people in the article and bought all the books I could find on it. One was a book called Stock Market Prediction by Donald Bradley. He had been the senior editor of American Astrology Digest Magazine, and he developed a way of looking at all planetary aspects and weighting them by classical astrology and a few other technical criteria. He created a model, which basically represents all the positive aspect power in the sky minus the negative aspect power in the sky. And the market will often follow that model. It doesn’t track things like eclipses and new moons and full moons, which are important inputs in astrology, but it can be quite accurate. It’s not always correct, but when it is, it’s often accurate to the day or within a couple of days.

It was interesting, but it wasn’t exactly what I was looking for. I wanted to know the actual percent changes in the Dow Jones Industrial Average during all of these astronomic events, rather than the traditional astrological meanings.
So, I did it myself. I learned how to calculate that and I did it by hand before we had computers, using a TI-59 programmable calculator mounted on a printer. So this is one of the things I keep an eye on, but I like to back it up with technical analysis to better understand market implications. I use about 28 technical market indicators, several of which I developed myself, along with the astrological data. And I’ve had a great deal of success with it.

Crux: OK, with all due respect, I’m sure many readers will think that sounds a little insane. Most people lump astrology in with psychics, crystal balls, and tarot cards. Can you give us a layman’s explanation of why you think these methods work?

Crawford: Well, in a word… no. I can’t fully explain how these things work. And anyone who says they can is probably not telling the truth.
I understand that these ideas are a little “out there” for most people. We humans like to think we’ve got things figured out, but the reality is we know remarkably little about the universe. Everyone knows what gravity is, but science still doesn’t know exactly why or how it works. We haven’t even figured out how many of the processes in our own bodies work. So I think it’s foolish to believe we fully understand how stars and planets may interact with each other. There are likely things going on that we don’t yet realize.

An acquaintance of mine – the late John Nelson – was a radio propagation specialist for RCA back in the ’40s. The company knew that sunspots and solar flares created magnetic storms that would disrupt shortwave radio signals on earth. They would have to reroute transmissions during those times. So, they asked John to research ways to predict those solar events. Now, John had absolutely no interest in astrology. But after finding little success early on, someone suggested he take a look at planetary alignments around the sun. So he gave it a shot. He took the 13 worst radio disturbance days on record at RCA and looked at the charts for those times… and he was shocked to find that they coincided with very complex astrological planetary interactions. He eventually came out with a book call Cosmic Patterns, and was able to show that planetary alignments relative to the sun could help time sunspot activity.

Is it inconceivable that these same alignments may have effects on the earth? Or that they could affect those of us living here as well? I’ve taken my methods to the scientific community and they won’t look at it. They’re superstitious in the negative form… because they know these ideas could have major implications. On the other hand, when I take this information to Wall Street, they say, “What’s your record?” When I show them, they buy it. They’re concerned with results.

Crux: OK, fair enough… I’m sure many readers will remain skeptical, but based on the track record you’ve posted on your site, it’s clear you’ve had some success with these strategies. Can you talk about some of your more notable calls?

Crawford: Sure. After the first three years of my newsletter – ’77 to ’81 – I was written up by Dan Dorfman, who had been a writer for The Wall Street Journal previously, or somewhere along the line. He was based with the Chicago Tribune and syndicated in 96 newspapers, and he wanted me to come down and bring every letter I’d ever written. So I did, and he wrote me up as having been right on nine out of 10 calls from ’77 to ’81. I think it was in January/February of ’81. The next month, March the 4th, I was on ABC’s 20/20.
I made my name on Wall Street a few years later, when I predicted the top day and the crash in 1987.

Some of your readers might remember the so-called “harmonic convergence” that was celebrated by the New Age people that Fall. Without getting into too much detail, the theory behind these kinds of planetary alignments is that they can cause changes in the earth’s energy. And these changes can manifest themselves in the way groups of people interact, how the stock market trades, and even in natural phenomena like earthquakes. The harmonic convergence was supposed to be a big one. It was also a Mayan calendar date. The guy who wrote the book about it, Arguelles, was guessing it would occur August the 17th. So all these New Age people went out and celebrated and danced and prayed and meditated and whatnot on August 17th. Well, I looked at that date and I didn’t see anything important. So, I was moving the computer ahead, looking at the sky day after day ahead of that to see if anything was really developing.

Seven days later, on August 24th, there was the tightest five-body conjunction in at least 800 years. I said, “That’s where the Mayan’s date actually is because it’s all visible planets and they could compute them.” So I said that the market would peak on August the 24th, give or take three days, after which we would have a horrendous crash. If you go back and look, the high close was actually August 24, 1987. Then the market dropped, drifted down, and hit a new low on the day of the solar eclipse on the fall equinox. It scared the traders in the morning, then quickly turned around and ended up being the biggest up day in points in history to that date.
The market rallied for a couple of weeks before turning back down. On October 6, just before the lunar eclipse – which probably triggered the huge 1987 California earthquake by the way – you had the biggest down day in history in points in the Dow Jones Average. And that started the slide into the crash.
I was on Financial News Network – what’s now CNBC – on the Friday before the crash, and the host, Ron Insana, asked me what I thought about the markets then. I said I thought we could see a 150-point down day followed by a 200-point down day. In those days 100-point moves were uncommon. That was the most bearish or negative thing anyone said on television at that time. And as it happened, the market was down 108 points on Friday, option expiration, and 508 points on Monday, the biggest point and percentage change ever, I believe.

I’ve also made some interesting non-market calls. If I see a particular astrological event but can’t quite figure out what it means for stocks, I’ll go to a book written in about 1912 by Ebertin in German. It’s called The Combination of Stellar Influences. I’ll look at three-planet pairs, because they can give very specific meanings. In 1997, there was a solar eclipse, which is a sun and a moon combination, along with a Venus, Saturn, and a Pluto combination. So I looked up the first three of those five, those three planets together, the middle three planets together, and the far right planets together, and Ebertin said “tragic love, socially awkward.” That’s what I wrote in my newsletter that month for that specific day. That ended up being the day that Princess Diana died. January 28, 1986 looked pretty bad for something blowing up, and I said so in my newsletter.  That turned out to be the day the Challenger blew up.

There was a lunar eclipse in April ’86, conjunct Pluto, and I said if you don’t feel this one, you’re probably not alive. Within three or four days of that, Chernobyl blew up and it increased the radiation levels in the whole world. 

On September 4, 2001, I wrote the United States will be at war around the weekend of the 7th or 8th of September. And I don’t think anyone got anywhere near as close or as particular as that… no psychic, no card reader, nobody. A friend of mine, an astrologer named Bob Zoller, had said he wouldn’t be surprised if we have a terrorist event on American soil sometime in September. I didn’t get that, but I got the closest to the exact times by far.

Crux: How about the recent financial crisis? Did you see that one coming?

Crawford: I wrote a piece called “The Mars/Uranus Crash Cycle” in 1996, I think. I noticed that all of the crashes of the last hundred years took place at the same portion of the Mars/Uranus cyanotic cycle. 

Now, that’s every two years and we don’t have a crash every two years, but every crash has been after the opposition of Mars to Uranus and before the next conjunction, about 30 down to 40 degrees before the next conjunction. All of them took place in 40% of that cycle. So, if the technical analysis is suggesting something bad, and fundamentals of the economy or financial situation are also beginning to flash some warnings, then you could have a crash… and it’s going to be in that period.

I was seeing all through 2007/2008 that we would be having a crash, but I didn’t think it would be until after the Mars/Uranus opposition on August the 6th of 2008. And sure enough, we rallied into the summer. Actually, there was a solar eclipse on August 1 that went all the way across Russia – not visible across the path of the eclipse.  Then, on the 6th, was the opposition of Mars to Uranus, which sometimes can signal a surprise relating to war or violence. Well, that was the day that Russia attacked Georgia. The U.S. market dipped on that day, went back up a day or two later, and went to a higher high and that was it. It turned around and just went into the tank.

I also predicted that October 10th would be the best probability of a crash, give or take a couple of days. Well, October 10th, the market opened down over 700 points. It’s still the record for the number of new 52-week lows on the New York Stock Exchange. 

We did quite well in 2008. 

I was ranked the number one stock market timer of the year for 2008 by Hulbert Financial Digest, that ranks that kind of thing. In fact, they said I was number one from October 1, 2007 to October 31, 2009, out of the 500 or so newsletters they track.

Crux: You’ve made some calls recently that have gotten attention in the media. Can you talk about what you’re seeing now?

Crawford: Sure. Well, the one problem I’ve had recently is that the Bradley model, which I told you about before, topped in early March and started down, and goes down into this big alignment from which it bounces, at least a little bit, and then dips back down a little into the fall. But the Mars/Uranus crash cycle goes sharply up into the time of that big alignment and then crashes afterward. The signals are a bit conflicting, so I’ve been trying to play it by technical market analysis. We went short into May 6 this year – the day we had the flash crash – and were able to profit from it.

In the newsletter, I had been saying that we were going to see a very powerful astrological alignment – known as the Cardinal Climax – in August, so I put the best guess at a market crash between May 1st and November 1st. The flash crash that took place on May 6th was the biggest intra-day down move in points in history… so, technically, that’s already met our minimum conditions. But we’re nowhere near the end of this period. Because of the Mars/Uranus crash cycle, whatever happens prior to the August 1st alignment should be minor compared to what happens after. Specifically, the period of time to be concerned with is August 1st to the end of March 2011. But I think that there are so many dangerous situations in the world right now that the crash is going to be sooner rather than later.

Historically, the worst month in the stock market is September, and crash dates tend to be September or October.
I once did a study of all big down days in history from 1928 or so – and put them around the calendar – and two-thirds of the biggest down days took place in one-third of the calendar year, centered on the fall equinox. In light of all these negatives, this summer and fall could be one we’ll never forget. To put it in context, I was speaking at an astrology conference earlier this year and mentioned that I looked at the patterns back to 1897 or so, and this is the most powerful, energetic, and challenging alignment that I’ve ever seen. I also mentioned that a colleague in Vienna has calculated the Bradley model back 200 years and he said that this summer will be a new low for the 200 year period.

Well, after I said that a guy got up and said, “I checked back 1,000 years and there’s nothing like this.” Then another guy gets up across the room and says, “I checked back 10,000 years and there’s nothing like this.” 

So I’m saying this alignment is the most powerful and transformative thing in all of written history, and that includes WWI, WWII, the Great Depression, the Black Plague, and the Fall of Rome.

Crux: Wow… that’s quite a statement. Can you explain what makes this alignment so powerful?

Crawford: Well, it’s the tightness of the alignments and the potential destructive energy of the alignments. If the planets are in soft aspects of 30, 60, or 120 degrees to each other, it tends to be an easy time, a lax time, a quiet time. If they are at 45, 90, and 180 they tend to be stressful. And it’s all just energy, but people are not used to dealing with the power of that kind of energy. In this case, it’s Mars/Saturn conjunction exact opposing Uranus, and with Jupiter a couple of degrees off, but the Jupiter is in exact alignment square Pluto in the same couple of days that the Mars and Saturn are exact opposing Uranus. So, it’s all at zero degrees of cardinal signs. According to astrologers, when things happen at zero of the cardinals, it affects the whole world.

Crux: Are there false alarms with these big alignments?

Crawford: My experience is that they’ve all had big things happen, they just don’t all affect the market. Sometimes they’ll manifest in other ways, like the Challenger explosion or Chernobyl. Many of the less powerful alignments pass without notice by most people, but the big ones typically result in newspaper headlines. There was a lunar eclipse forming a grand cross with Mars opposing Pluto in 1990. I wrote about that in my letter, and said, “This will be one of the worst days of the century. There will be coercion, a use of force, a large explosion and heartlessness or cruelty on August 2 to August 7 of 1990.” On August 2, Saddam Hussein unexpectedly attacked Kuwait. So I keep an eye on them.

Crux: Are there particular days you think could be especially important this year?

Crawford: Definitely. When I spoke this past spring to the Hard Money group in Tempe, Arizona, I said the next important dates were April 26th, when Saturn opposes Uranus, June 26th, which is a lunar eclipse conjunct Pluto, and then July 30th to August 3rd. I’ve also mentioned these dates several times in my letter. 

The first one, April 26th was the high day of the stock market this year.

Crux: I was just about to mention that.

Crawford: During the 10 days after that, the market dropped over 800 points. During the five days after June 26th, the lunar eclipse, the market dropped about 500 points or so.

The next dates are coming up very quickly.
Then, going past this period, the fall equinox has a full moon across this same angle, the zero of the cardinal signs from zero Libra to zero Aries on the equinox. And then the winter solstice has a lunar eclipse on it across the same angles, zero of Capricorn to zero Cancer. So the challenges won’t end in August. There will be echoes afterward for quite some time.

In the latest issue of my letter I wrote, “Then we have this huge alignment which will be followed by a full moon on the fall equinox and a lunar eclipse on the solstice. We can expect the depth and scope of dislocation during this period to exceed anything we have ever witnessed both in otherwise civilized interaction among nations, and likely our fill of natural disasters.”

Crux: How long do you see this period lasting?

Crawford: I honestly can’t say… I haven’t looked that far ahead. Some astrologers say it’s still rough until about 2016.

Crux: Let’s bring this discussion back to markets… How do you recommend readers invest for this period? Do you have any thoughts on commodities or precious metals?

Crawford: Well, we’ll be short the stock market through inverse ETFs. You could also short stocks or buy puts, but not too many people are comfortable with the risks of options, so I don’t recommend it to clients. We’re already seeing the beginnings of distrust for government and government bonds and currencies. There are no longer any currencies that are backed by the promise that you can take this paper over there and exchange it for gold or silver. 

Governments are printing money like it’s going out of style.

They’re creating more of a commodity without any increase in value, so the value of that commodity has got to go down.
So, I think the fiat currencies are going to come down. It’s just a matter of time. Whether they come down one at a time, or there’s a sudden rush for the exits in all of them, I don’t know. But I think it’s gonna hit the dollar too. It’s not gonna avoid us any more than it avoided Zimbabwe. That will send gold, silver, and all real things much higher.

Crux: So I take it you fall on the inflation side of the inflation vs. deflation debate?

Crawford: Yes and no. They printed all of this money a year or so ago. This is inflation by definition, but the banks are not loaning it and no one is spending it… So it hasn’t worked its way through the system to the prices of popular goods. It hasn’t shown up as price inflation. So, we may see deflation for some time until the banks have gotten rid of all the bad debts and begin marking assets down to actual prices. But eventually inflation will hit the price levels of real things. We live in interesting times.

Crux: Any closing thoughts?

Crawford: Well, I’m looking at what could be coming and it makes me think of the Mormons who are required to keep two years worth of supplies in their homes. That’s not a bad idea, particularly food, water, medication, cash, batteries, and ammunition, if you’re into that kind of thing – I’m not. But being as prepared as you reasonably can is generally a good thing. Also, astrology suggests prayer and meditation may be able to change your vibration rate so that the worst of the things won’t happen to you. But that’s an entirely different conversation.

Crux: We’ll have to save that for next time… Thanks so much for talking with us. Take care.

Crawford: You’re welcome. Thank you.

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