The system he calls the Technical Aspect Oscillator (TAO) is described in the April/May issue of The Mountain Astrologer magazine. It is designed to scientifically measure and predict the impact of orbiting planets on investor sentiment and, by extension, price moves in the marketplace. Schulz says continual tracking has revealed close statistical correlations between the global psychological indications predicted by the technology and bullish and bearish stock market sentiment. There’s less than a one in 10,000 probability that the observed correlations occurred by chance.

“The research supports the astrological premise in two important ways. It confirms that the various archetypal energies astrologers have traditionally identified with the orbiting planets can be rigorously observed impacting human affairs. And it confirms that changing planetary alignments or patterns predictably influence outcomes in measurable ways,” he noted.

Modern astrologers believe that archetypal energies associated with transiting planets are both distinctive and dualistic in nature. For example, Saturn is positively identified with such qualities as stability and sound philosophical judgment and negatively with fear, separation, restriction and physical limitations. Jupiter represents the principle of expansion, optimism and success, but is negatively identified with extravagance, inflation, excessive overconfidence and the like. In a similar vein, Martian energy is positively identified with action and initiative and negatively with anger and frustration, Schulz said.

Changing Angular Relationships

“For centuries, astrologers also have claimed that the changing angular relationships between orbiting planets powerfully impact events on earth. Whether the various planetary archetypes will be expressed positively or negatively largely depends upon the way they are aligned with each other at any given time,” he explained.

As viewed from the earth, orbiting planets appear to be moving at different speeds. The reason for this is because some planets are a lot farther from the sun than others and have move celestial distance to cover in their elliptical orbits. As a result, faster moving planets (including the sun and moon) appear to continually overtake slower moving planets, forming what astrologer’s call applying and separating “aspects” as part of predictable cycles. Because the mathematics of celestial mechanics are well understood, astronomers and astrologers can quickly determine precisely where in the heavens the sun, moon and every known planet in the solar system can be found. Also known is the exact number of astronomical degrees separating the planets as they travel through the various zodiacal signs.

Some aspects between planetary pairs are deemed to be stressful while others promote harmony and ease. For example, planets forming aspects of 60 and 120 degrees (the sextile and trine) are believed to influence the human psyche in positive or productive ways, while the stressful square and opposition ( 90 and 180 degree) aspects have the opposite affect. Aspects are said to be “in orb” or operative a few degrees before and after the angle is exact. Schulz says the zero-degree conjunction is a powerful aspect that begins and ends the cycle and can be experienced either positively or negatively depending upon the psychological characteristics of the planets involved in the aspect.

“Scientists have ridiculed this idea since the 17th century, arguing that no mechanism exists to plausibly explain how planetary energies could manifest in this way. However, new evidence impressively supports the astrological position,” Schulz maintains. In physics, an oscillator is a measurement between maximum and minimum values. More than two decades of research went into development of the TAO 2 technical aspect oscillator Schulz created to analyze investment sentiment in the financial markets. On a continual basis, the TAO 2 system computes the changing angular relationships between nine different planetary pairs. The planets Saturn, Jupiter and Mars are prominently featured in these pairings.

Moving Average Compared

Schulz says the TAO 2 technology continually calculates a weighted positive or negative value for every degree of angular separation between the planetary pairs. Also compiled is a composite score and moving average that can, over time, be statistically compared with moving averages for the various stock market indexes. Simply, like the market averages, when TAO 2’s average score is rising people’s attitudes and outlook are hypothesized to be more optimistic. Conversely, when the number is falling, pessimism persists.

Because TAO 2 and the various stock market indexes are independent variables with known and constantly changing numerical values, they can be compared with each other using the Pearson product-movement correlation coefficient, a common statistical test used to scientifically determine whether a linear relationship exists. This method creates correlation values (the Pearson r) between -1.000 and +1.000 with r = +0.30 the threshold for statistical significance. In a series of tests conducted between January 1, 1999 and June 30, 2008, the TAO 2’s moving average was compared with the Dow Jones Industrial Average (DJIA) and S&P 500 Index twice a week on Tuesdays and Fridays over the 117-month period — a total of 990 separate comparisons for each index. The correlation value for TAO 2 and the Dow Jones Industrial Average was r= +0.72, which is well above the threshold for statistical significance. A similar comparison with the S&P 500 Index produced an even higher r = +0.81 correlation.

“Correlation is not causation. Stocks can and do move against the TAO 2 average for indeterminate periods of time. But the statistics suggest an extraordinary connection between the aspect oscillator and stock indexes that cannot easily be explained away by astrology’s critics,” he said. Schulz believes the results are difficult to dispute because the technology effectively blends applied mathematics with astronomy in a quantitative numbers-in, numbers-out type system that automatically produces raw scores from data input into mathematical formulae. Subjective human interaction is not involved in any way.

Another test for the TAO technology examines its effectiveness as a stock market timing device. Schulz routinely relies upon the technical analytical tools used by insiders in the business, but doesn‘t make a move in the marketplace without first checking directional indications predicted by the TAO system.

While trillions of dollars in paper assets were vanishing from the stock portfolios of agonized investors around the world, a portfolio of Exchange Traded Funds (ETFs) posted on the www.schulzonmarketcycles.com website between May 5, 2006 and April 1, 2009 were up a robust 395 percent.

For market-timers like Richard Schulz, calamitous bear markets aren’t the financial disasters they are for most investors. Those who are good at timing the markets often find that it’s easier to make money when market sentiment turns bearish. So, as trillions of dollars in paper assets were vanishing from the stock portfolios of agonized investors around the globe, Schulz’s online newsletter (SchulzOnMarketCycles.com) was reporting a significant increase in value for the exchange traded fund portfolio (ETFP) posted on the site.

After reaching a high of 14,165 points on October 9, 2007, the Dow Jones Industrial Average Began a precipitous 47 percent decline to a low of 7,510 on November 20, 2008. Incredibly, during this same time period, the ETFP posted on Schulz’s website was notching a dramatic 207.2 percent gain. Performance results for the portfolio were posted online for the first time on May 5, 2006. By January 1, 2009, the portfolio was up a robust 325.3 percent!

Timing market moves (short-selling) is not for the fainthearted. Patience and discipline are required, because things sometimes go very badly. An astrologer and self-taught technical market analyst, Schulz draws upon many years of trading experience and relies upon the analytical tools routinely used by insiders in the business. But he doesn’t make a move in the markets without first consulting the technical aspect oscillator (TAO) that he designed to scientifically measure and predict the psychological impact of transiting planets on investor sentiment and, by extension, price moves in the marketplace.

Effectively, the technology systematically analyzes and assigns weighted positive or negative values to selected transiting planetary pairs and generates a raw composite score for any point in time — past or future. 1 When the system is being used to time short-term market moves, Schulz utilizes what he calls the Quick TAO, which tracks market movement on a monthly basis. The system he calls TAO 2 tracks long-term trends and is arrived at by calculating the average between the monthly scores and a mathematical summation of these scores over extended period of time (weeks or months). In Schulz’s market-timing system, the short-term psychological shifts indicated by the quick TAO generate buy and sell signals. The trend line created by the TAO 2 scores show how psychological factors are projected to impact market trends over the long haul.

To put it simply, when the TAO 2 number or score is positive and rising, people’s attitudes and outlook are hypothesized to be the most optimistic. Conversely, when the TAO 2 number is negative and falling, fear and pessimism prevail.

The impressive performance results posted on Schulz’s Web site (SOMC) confirm TAO 2’s utility as a market-timing device. Even more importantly, the technology has emerged as a tool that can be used to scientifically test the astrological premise in a rigorous way. If the astrological premise is viable, and the TAO 2 methodology an accurate reflection of astrological principles in action, one should presumably be able to demonstrate the efficacy of the system — and the validity of astrology — by testing the product’s ability to predict behavioral extremes. Arguably, there may not be a better place to test this idea than in the financial markets, where mood swings fluctuate wildly between giddy optimism and mind-numbing despair.

The evolving TAO 2 technology significantly expands upon concepts and ideas initially introduced by financial astrologer Donald Bradley in the 1940s. To test the veracity of TAO 2, Schulz devised a way to create a moving average 2 for raw TAO 2 scores, which he compares with average price gains and losses for the Dow, the S&P 500, and other financial indexes. Because TAO 2 and the various market indexes are independent variables with known and constantly changing numerical values, they can be compared with each other using the Pearson product-moment correlation coefficient, a common statistical test used to scientifically determine whether a linear relationship exists between independent variables.

The Pearson product-moment correlation generates a correlation value (the Pearson r) between –1.000 and +1.000. An r value of +1.000 indicates a perfect positive correlation, and for tests with more than 100 data pairs (n = 100), any r value greater than +0.30 is statistically significant. Simply, in a series of highly visible tests conducted between January 1, 1999 and June 30, 2008, Schulz demonstrated a statistically significant correlation between the global psychological indications predicted by the TAO 2 system and bullish and bearish stock market price changes.

In the study, TAO 2’s moving average was compared with the DJIA and S&P 500 indexes twice a week on Tuesdays and Fridays. There was a total of 990 data pairings (n = 990) for each of the stock indexes over the 117-month testing period. Convincingly, r values were substantially higher than the r = +0.30 threshold signifying statistical significance. The correlation between the TAO 2 moving average and the Dow Jones Industrial Average was r = +0.72, and for the S&P 500, it was r = +0.81. In both instances, the correlations were statistically significant to greater than one in 10,000 against chance!

It should hastily be noted that correlation is not causation; stocks can and do move against the TAO 2 moving average for indeterminate periods of time. However, what the statistics suggest is an extraordinary connection between the aspect oscillator and stock indexes, which cannot easily be explained away by astrology’s critics.

Results achieved by the TAO 2 technology in this test are hard to refute because the technology blends applied mathematics with astronomy in a quantitative numbers-in, numbers-out type of system that automatically produces raw scores from data input into mathematical formulae. There is, in other words, no subjective human interaction. What’s more, the testing method has been completely transparent, with highly visible TAO 2 average scores projected, charted, and published in advance on the SOMC Web site. Week after week, the test was always about how faithfully reality (activity in the marketplace) reflects what’s happening in the heavens.

As Schulz puts it: “Astrologically, something is going on that asks for continuing and further investigation.”

Is it possible the astrological community finally has a scientifically plausible measuring device capable of producing the sort of objective proof that is powerful enough to convince skeptics and be a game-changer in the court of public opinion? Schulz describes the system’s current state of technological sophistication as having barely progressed to the Model T Ford stage, but he thinks rapid progress is possible now that the system’s formulation has been programmed and added to the professional research software package commercially available from Cosmic Patterns Software, Inc. of Gainesville, Florida.

A long-rime resident of Libertyville, Illinois, Schulz was introduced to astrology in the early 1970s; he initially studied with Chicago area astrologers Doris Hebel, Irene Diamond, and Christine Rechter and later with the Ebertin School of Cosmobiology, Manik Chand Jain of the Vedic tradition, numerologist Kevin Quinn Avery, and astrologer Charles Jayne. Schulz is an amateur astronomer and meteorologist who has taught astrology at the community college level. And he has an undergraduate degree from Southern Illinois University and a master’s degree in Psychiatric Nursing from California State University in Los Angeles. In graduate school, his master’s thesis described a positive significant correlation between lunar cycles and the rise and fall of medication dosages administered to patients in a Veterans hospital.

Schulz’s formal education has included a heavy load of science, mathematics, and psychology, but his fascination with business and financial astrology is long-standing as well. Over the years, his primary research goal has focused on refining and advancing the work Donald Bradley began years ago. Like TAO 2, Bradley’s Siderograph was designed to use astrological principles to predict cyclical market activity. Schulz became excited about the technology after evaluating results published by the author in his book, Stock Market Predictions, for the year 1946. However, he wasn’t able to replicate Bradley’s results (find similar correlations) for other years, and disappointment related to this failed effort morphed into what became a 25-year odyssey to find a better way to develop the technology.

Like Bradley’s Siderograph, TAO 2 features an aspectarian that assigns positive or negative numeric values to every degree of planetary separation. However, major technical differences between the systems have emerged over time. For example, Bradley’s aspectarian uses all of the planetary aspects forming in the heavens at any given time; TAO 2 has evolved into a system that uses nine selected planetary pairs, primarily involving the planets Mars, Jupiter and Saturn. Also, Bradley assigned subjectively derived values to conjunctions, which Schulz came to view as a serious methodological flaw. To enhance the usefulness of TAO 2 as a scientific measuring device, Schulz made a commitment to develop it as a system that used angular separation between planetary pairs as the sole data input, beginning with zero degrees of separation (the conjunction).

In another major breakthrough and departure, Schulz was able to build TAO 2’s aspectarian using harmonic theories introduced by British astrologer John Addey. In Schulz’s interpretation of harmonics theory, positive aspects are derived from the first three harmonics of the number three — the semi-sextile (30°), sextile (60°), and trine (120°). Stressful aspects derive from the first three harmonics of the number two — the semi-square (45°), square (90°), and opposition (180°). The TAO 2 aspectarian is solely based on the numbers two and three and their harmonics, which are logarithmically weighted to be mathematically and logically consistent. Simply put, TAO 2’s success as a predictive tool means that traditional astrological aspects apparently work as they’re suppose to work according to ancient theories.

Schulz was also able to incorporate into the system innovative concepts pioneered by Sherman McClellan, the technical analyst, mathematician, and statistician who invented the McClellan Oscillator and Summation Indices as stock market analytical and trading tools. Like McClellan’s oscillator, TAO 2 is “zeroed” so that, for any given period of time, the summation of all the raw scores equals zero. The complicated math involved in this step isn’t easily explained, but the end result is easy to visualize.

Picture a simple chart with a horizontal zero line located halfway up the perpendicular axis. Based on what’s happening in the heavens, the graph of the TAO 2 aspectarian (its moving average) can be observed arching above or below the zero line in a curvilinear fashion. In Schulz’s experiments, when the scores have been above the zero line for weeks or months, the global investment psychology has been positive or bullish. Conversely, whenever it has moved below the line for similar periods of time, market sentiment has turned decisively bearish.

Getting TAO 2 to produce reliable results has been no easy task. It took many years of grinding effort — and several Eureka moments — to move the technology along to its current level of sophistication, including inspiration from unexpected sources. For example, Schulz credits the contrarian sentiment indicators that became popular in the 1970s and ‘80s with providing motivational impetus. The contrarian sentiment index is created by polling investors to learn their opinions about whether the market is headed up or down. According to contrarian thinking, the point at which positive investment sentiment is peaking (a preponderance of investment gurus are optimistic about the future) is when the contrarian factor supposedly kicks in and the market tanks. Similarly, the experts supposedly get it wrong on the downside as well, with strong periods of recovery frequently occurring when pessimism prevails.

Schulz struggled with the idea that the experts could be as consistently wrong about the markets as contrarian logic suggested they must be. But it was also clear to him that, by emphasizing the push and pull of psychological factors, contrarians seemed to be onto something. From a psychological perspective, cyclical trends in the market are observed to be moving from positive to negative in the same way that astrological aspects move from trine to opposition and back. Schulz resolved to build a more accurate tool for predicting the psychological impact of transiting planets, not only on mysterious cyclical trends in the financial markets, but on other natural world phenomena as well.

The fact that TAO 2 correlates with global stock indexes makes it useful in a tangible way, but the technology can also be used to effectively test astrological assumptions in other ways. For example, researchers might look for correlations between the psychological predispositions predicted by TAO 2 technology and the decisions made by government leaders in times of crisis or natural disasters. Or, more frivolously, they might check to see whether correlations exist between the rich and famous (or other groups) and their TAO 2 scores at birth. Schulz speculates that astrological researchers who use the technology will also be able to examine theories related to transits, progressions, and directions to sensitive angles in the birth chart.

The possibilities, he believes, are practically limitless.

(Reprinted from The Mountain Astrologer magazine)

Notes
1. In statistics, a raw score is the number obtained directly from the measuring instrument before it is tested or transformed in any way; it is any number as it originally appears in an experiment.
2. A moving average is an indicator showing the average value of a security over a set period of time. It is continually changing or moving (up or down) as new historical or sequenced data is added to and impacts the average over time.