Today is the Summer Solstice, the longest day of the year in terms of daylight hours and the first day of summer in the northern hemisphere.
The literal meaning of the word “solstice” is “the Sun (Sol) standing still”. That’s what seems to be happening from our point of view on Earth, anyway – for the past six months the Sun’s apparent path through the sky has gradually moved a little bit higher, a little more northward, each day.
Today, however, the Sun’s path through the sky is the same as it was yesterday; the Sun is “standing still.” Tomorrow’s path will be just a tiny bit lower, a little more toward the south, than today’s trajectory. It will continue to move a little lower each day until the Winter Solstice in December, when the cycle begins again.
The solstices are major turning points in the year, and they are often accompanied by shifts in mass psychology and sometimes changes in market trends as well. That’s why W. D. Gann paid such close attention to them, identifying them as key points in the annual cycle that all traders should remember.
This time around, of course, the market top came two days prior to the solstice, with Wednesday’s Sun/Jupiter conjunction calling the shots. And it was against that background of a major market sell-off that we saw the trading action respond to the Summer Solstice today.
As the Sun was standing still, the markets did the same.
The dizzying plunge in stock prices of the past two days paused briefly. Intraday attempts at a rally never really got off the ground, but the push to the downside didn’t pick up much momentum, either. The major indices closed up for the day, but their gains were miniscule compared to the losses of the last two trading sessions.
In other words, stocks basically spent the day treading water. While the big decline has paused, there are few clear indicators that price support will actually hold at the current levels. We’ll have to wait until next week to see if the bulls or the bears resume control. For right now it’s time to step back from the market action, catch our breath, and just stand still for a moment.
Not a bad thing to do on the Summer Solstice!