August Decline Fulfills Most Downside Targets
08/31/15 INSIIDE Track: “Stock Indices have fulfilled a significant portion of what was forecast for the middle half of 2015 – between late-April & late-Sept. 2015 – when a 20% correction has been expected. The general description – published in Nov. 2014 and reprinted on page 4 – provided an overall roadmap for a potential scenario… which is now unfolding.
So far, the Indices have adhered closely to that scenario, including events in Dec. 2014, April 2015 and the period from May 2015 into the present – when the actual decline was considered most likely.
As described many times, that analysis was NOT based on just one or two cycles or indicators!
Instead, it was the synergistic combination of MANY corroborating factors, including the very big-picture ones that have been recounted numerous times this year. Synergy is the key!
These include the 40-Year Cycle of Stock-flation, the 17-Year Cycle of Financial Crises, the 17-Year Cycle of Stock Corrections(~20% drops between late-April–late-Sept.), the ~7-Year Cycle of Stock Market Peaks – a cycle linking March 2000 & Oct. 2007 highs & projecting another peak for May 2015, the 7-Year AND 14-Year Cycles of Stock Crashes (see 1973, 1987, 2001 & 2008).
Reinforcing those multi-year & multi-decade cycles were the 15–16 Month (~66-Week) Cycle – that projected a high for late-April/early-May 2015 – and the related 32–33 Week Cycle that projected a peak during the weeks of April 27—May 1st and May 4–8th, 2015 and a likely drop into Sept. 14–25, 2015. All of these were previously detailed… and all are now coming to fruition.
Leaders & Proxies…
Since an Index like the DJIA should not be viewed as the only – or even the primary – barometer of US equity vitality, I examine many other Indices… and also watch various stocks as important barometers (or ‘proxies’). One of those has often been cited in the past and has adhered to the cycles and expectations with uncanny accuracy…
In the computer age – and particularly in the mobile-technology & music age – that stock, AAPL, is an obvious choice. So, is it any surprise that AAPL peaked on April 28, 2015 (at 134.54) – in perfect lockstep with these stock crash cycles – and plummeted almost 32% into Aug. 24th – spiking down to 92.00 on that morning.
In doing so, it fulfilled most of the 2015 Stock Index cycles and retraced 50% of its 2013–2015 advance, while bottoming right at 6–12 month support (and monthly 21 MAC support).
Other stocks – like SBUX – plummeted 29% into Aug. 24th while FB lost 27% and spiked to new intra-year lows on Aug. 24th. Perhaps YHOO is the best ‘proxy’ – peaking in late-2014 (along with the 40-Year Cycle of Stock-flation), dropping 20% into 1Q 2015 and then rebounding into mid-April 2015.
It turned back down in late-April – right on target – and has dropped over 35% from its April peak, spiking to new 22-month lows on Aug. 24th. At the same time, the DJ Transportation Average – the Index that has led this decline (as it has led every major move since the late-1990’s) – attacked the 20% correction threshold on Aug. 24th.
That Aug. 24th low came at the precise midpoint of the ~90-degree cycle governing lows in the DJTA…At the same time, the Aug. 24th low perpetuated a ~60-degree high (Feb. 25)–high (Apr. 23)–high (Jun. 23)–low (Aug. 23–25th) Cycle Progression… adhering to multiple – and sometimes opposing – geometric cycles since its late-2014 peak…
“Early-Aug. Downturn”
Last month’s issue detailed the diverse bearish indicators that had been signaled – in Indices ranging from the DJTA & DJUA (in early-2015) to the NYSE & DJIA (in June/July 2015) – all portending the most significant decline to begin in early-August…
The Indices obliged – peaking and turning lower on August 5/6th – entering what was projected to be ‘the most tenuous’phase of their declines, when ‘the lion’s share’ of those drops are seen. The weekly close of Aug. 7th confirmed that, with the DJIA closing below 17,400 (the signal for exiting all remaining longs & confirmation of a 6–12 month corrective wave down) – a decisive signal.
The action between Aug. 5th—Aug. 24th left little doubt that these cycles and signals remain VERY pertinent. In the process, the DJIA dropped to within 30 points of its 2014 low (15,340).
If it is able to drop below 15,340/DJIA – before Dec. 31st – this would be the first time the DJIA has violated its previous year’s low since 2009… and only the 5th time in over 30 years. At least one cycle – the 7-Year Cycle – is arguing in favor of that taking place in 2015 (as it also occurred in 2008 & 2001)…
Global Indices
China’s Shanghai Composite also fulfilled projections for another precipitous decline in August – expected to take its from ~4100to below 3100. It has now broken to new intra-year lows while shedding over 40% from its peak (in 11 weeks). The Nikkei also plummeted during the ’Danger Period’ and is expected to quickly drop to 16,300–16,600 (and ultimately to ~14,000).
The DAX – after peaking in April 2015 in synch with major cycles, while almost perfectly fulfilling 1–2 year upside wave targets at 12,351–12,366/DAX – also plummeted after Aug. 5th and reached its intra-year support & 3–6 month downside target at ~9,400,shedding ~25% of its value in the process… another prime fulfillment of the 17-Year Cycle.
The FTSE also validated expectations, plummeting to new intra-year lows while dropping 19% from its late-April 2015 peak. While fulfilling the minimum downside objectives for these 2015 declines, all these Indices leave open the potential for another decline into late-Sept./early-Oct.”
Dozens of bellwether stocks – and many US & global indices – have fulfilled projections for a ~20% drop in the middle third of 2015. Bearish cycles extend into late-Sept. before a 4Q 2015 rally is expected.