Living as he does in Silver Springs, Md., Clif Droke has what some might consider an odd fascination with hourly barometric pressure readings in New York City.
Mr. Droke owns Cycle Forecasting Systems, which forecasts stock and commodity prices using technical analysis. In addition to working on mathematical methods, he has found that changes in the weather also can accurately predict what stock prices will do. Specifically, Mr. Droke said, air pressure seems to have a direct effect on traders' moods, and thus influences the direction of the market.
"In the months since we have been tracking the barometer, we are amazed that it has forecast every important top and bottom to date by one to two days," Mr. Droke boasted in the Oct. 30 issue of his newsletter, Clif Droke's Leading Indicators.
A casual review of air pressure readings taken from Oct. 16 to Nov. 3 and plotted against the NYSE Composite index, indicates each rise or fall in the price level of the index came a day or so after a rise or fall in the area's barometric pressure.
For example, on Oct. 15 and 16, a low-pressure system caused the barometer to drop to 29.94 inches of mercury. On Oct. 17, the NYSE Composite lost 12.21 points, and the slide continued Oct. 18, when the index lost another 4.3 points.
By Oct. 17, barometric pressure had rebounded to 30.27.; and on Oct. 19, NYSE Composite stocks finished up 13.5 points. The next day the rebound continued, creeping up another 3.5 points.
Mr. Droke has reams of entries in logbooks supporting the hypothesis.
"The barometer led the NYSE at every important turn, especially at bottoms," he wrote in his newsletter.
In general Mr. Droke and his colleagues found that readings at 30.05 inches of mercury and rising generally lead to a bull market. Conversely, readings heading south of 30.05 usually mean a bearish market.
Mr. Droke said he got his inspiration from researcher Edward Lawrence Smith, whose 1939 book "Tides in the Affairs of Men" explored the relationship between weather and solar events and human behavior, and how humans, in turn, affect financial cycles.