Solar Flares and Market Swings Correlations

Recently a theoretical physicist by the name of Victor A. Brumberg from the Institute of Applied Astronomy in St. Petersburg published an ominous paper on the deleterious adverse effects of geomagnetic storms on physiological systems. Entitled: “Solar Madness” he argued that these episodic geo-cosmic events would initiate “unprecedented chaos” upon the world and in particular the continental United States.

Of particular concern, was the effect these type of storms have on financial markets causing wild price gyrations and stock valuations. Individual investors seem to be most at risk as they are especially susceptible to behavioral mood swings.

The United States National Oceanic and Atmospheric Administration (NOAA) posted warnings of how the Earth could be blasted by unusually sized solar storms in the coming years that would have profound effects on electrical power grids, global positioning satellite systems, as well as airline communications. Peak sunspot and solar flare activity is to commence from 2013 onward.

In Northern Russia, it is common for solar flare warnings to be issued, but the emphasis has been shifting to countries such as the United States, Great Britain and Japan. Real time data regarding geomagnetic activity can be readily obtained from the internet, the Weather Channel, as well as various news sources feeds.

Empirical Data Evidence

The research paper also backs up its claims with empirical statistical evidence that suggests a direct link and correlation between geomagnetic storms and stock market returns. In additions, voluminous psychology research has documented links to depression, emotional, and behavioral mood swings. This is a crucial element with regards to financial investment judgments and decisions. As an example, during high geomagnetic activity, stock market returns can be adversely affected by investors afflicted with a pessimistic attitude and consequently, are more inclined to sell.

Solar wind events can be incredibly fast traveling as much as 2 million miles an hour when it reaches the Earth. CMEs or Coronal mass ejections occur more frequently during active sunspot cycles. Advances in geomagnetic storm predictions have greatly improved forecasting activity from sources like NASA as well as other civilian agencies.

Peak seasonal solar activity begins in spring from March through April and again in the fall from September through October. Solar symptoms can be brief but its effects can become quite acute especially with individuals who already display overstressed systems. One study revealed a 36 percent rise in hospital admissions during peak geomagnetic activity. Of particular concern is the affect it has on high altitude pilots during heliomagnetic (solar) exposures. Already operating on high anxiety during flight, pilots are susceptible to a decrease in melatonin hormone levels that are essential in biological rhythms. Cardiovascular incidences can rise with hospital patients also. Healthy persons are not immune either, as the central nervous system can be affected along with the disruption of circadian rhythm an important factor in mood swing disorders.

Trading Strategies

The paper concludes with some trading strategy tips during intense geomagnetic activity. Examples would be timing transactions for good and bad days. Derivative securities could also be used as a hedging option as well.