Stock-Flation II

May–August 2015 = Capitulation Phase

            May 2015 –  The month of May begins the second third of 2015… when things should get a lot more interesting.  When looking at 2015, I have been viewing it from a perspective of ‘thirds’ – or 4-month periods.  One of the reasons has to do with the diverse concentration of cycles – at different points during the year.  They tend to divide the year into thirds.

Another has to do with the approximate breakdown of how a stock market transition is expected to unfold.  Since late-2014, I have repeatedly warned that this (expected) transition – from bull to bear – would be a slowly-evolving process, full of brief (but sometimes sharp) declines AND rallies.  The first 1/3 of 2015 was projected to be the transitional phase.

As a result, that would be expected to be a lot of sideways action to begin 2015.  Since September 2014, the focus has been on April 2015 when the first sign of trouble was expected to materialize – a warning sign of what was expected to follow (in May–Sept. 2015).

One of the possibilities – discussed since then – was that the weekly trends in one or more Stock Indices could turn down, during a drop into mid-April.  There were multiple reasons for expecting that, as well.

The two most significant were the intermediate/~90-degree cycle lows in mid-April and the ensuing cycle highs in late-April/early-May…At the same time, multi-year cycles were projecting highs in European Indices for March/April 2015.

All of that was expected to prepare the markets for the ominous, late-April–late-Sept. 2015 period.  By the time October 2015rolls around, the Indices should have experienced Culmination (late-2014), Distribution (1/3 2015) & Capitulation (2/3 2015).

Leaders

Another potential sign of trouble was seeing the strongest Indices (those that had been strongest since 2009, 2011, 2013 and/or even since mid-Oct. 2014) finally capitulate and trigger reversals lower.  There have been a few of these Indices, in focus, which have exhibited signs of leadership leading into 2015.  Perhaps the most convincing has been – and remains – the DJTA (Transports).  More on that Index in a minute.

Another, amplified by the developing stand-off in Europe, has been the DAX…Since this Index has/had been the strongest since Oct. 2014, it would likely be the last – or among the last – to show any signs of weakness.  The greatest synergy of cycles – in the DAX – converged in March/April 2015, projecting a top.

The extreme upside target for that peak – the yearly LHR for 2015 – was/is just above 12,600/DAX (2013 low ~7,400–2014 high ~10,000 creates 2015 LHR at ~12,600), with a corroborating multi-year LLH objective just below 12,000/DAX (see chart on page 4).

The DAX surged into the March/April 2015 cycle peak and topped at 12,390 on April 10, 2015… almost perfectly fulfilling extreme upside objectives – in time AND price.  It then, in the minimum amount of time possible, reversed its weekly trend to down as it was giving a convincing monthly reversal lower (just missing a monthly 2 Close Reversal lower).  So, in the case of the DAX, it was the strongest and did reverse its weekly trend down… a kind of ‘double-whammy’ Sign of Trouble.

The DAX suffered a quick 8.5% drop in April, mimicking the 8.5% drop that the DJ Transportation Average completed at its April 2015 low… two preliminary signs of trouble.  At the same time the DAX was exhibiting this ‘sign of trouble’, another leading Index also triggered an ominous reversal…

32–33 Week Cycle

Corroborating this pivotal period – and culminating the first 1/3 of 2015 – a nearly-ubiquitous cycle (and most of itsmultiples/divisions) also came into play on April 27–May 8, 2015 In a way, it is like the first third of 2015 handing the baton to the second third… when things should get more interesting.

In the original (Oct. 201440-Year Cycle – Stock-flation 1974–2014 Report, the big focus was on the 32–33 Week Cycle that had just projected a peak for Sept. 15–19, 2014…The ensuing phase of the 32–33 week cycle came into play in late-April 2015

Symmetry

All of this is occurring as the stock market is providing some compelling examples of symmetry on many levels – including on a 40-Year Cycle basis and an approximate 7-Year Cycle basis.  Both have been discussed for many months and repeatedly emphasized.  With respect to the former:

Stock Indices are in the process of transitioning into a new 40-Year Cycle, having just completed a 40-Year Cycle of Stock-flation – an inflationary advance in equity prices from Dec. 1974 into Dec. 2014.  This has been a replay – ’resembling’ what was seen between the early-1930’s and early-1970’s – a similar 40-Year advance – providing a form of symmetry within the bull market of the past 80+ years…

      From the Great Depression DJIA low of 1932, Stock Indices rallied for 40 years into 1972 (with an intervening, 35+% decline 5–6 years prior to that ultimate peak) – increasing more than 25-fold in the process.  That rally lasted into Jan. 1973 – making it a total of 40 years & 6 months – and led to a 50% drop unfolding over the ensuing 2-year period.

      From the Stock-flation DJIA low of 1974, Stock Indices rallied for 40 years into 2014 (with an intervening, 35–50% decline 5–6 years before the present) – increasing more than 25-fold in the process. In a couple Indices, that rally lasted into April 2015 – making it a total of 40 years & 4 months.

Those are two VERY similar, 40-year advances!

As for the latter, a ~7-Year high (Jan./Mar. 2000)–high (July/Oct. 2007)–high (Jan. ‘15–May ‘15Cycle Progression is forming and also portends a peak in 1Q/2Q 2015.

The S+P 500 & Nasdaq 100 – Indices that most recently set new highs – form a high (March 2000)–high (Oct. 2007)–high (May 2015Cycle Progression at this exact time… another form of cycle symmetry in these markets.

And then there is the potential for cycle symmetry on a 17-Year Cycle basis.  As described since late-2014, Stock Indices have suffered successive, ~20% declines – in the middle half of the year – on a consistent, 17-year basis.  The Indices are set up for a similar drop in 2015… another form of symmetry within this multi-decade advance…

However, the second third of 2015 – May–August 2015 – is when the declines are likely to begin overtaking the advances (inmagnitude) and setting a progression of lower lows, instead of ascending or lateral lows.

The last 6 months have been setting the stage for this as each advance has been smaller in magnitude, with each intervening decline representing a larger percentage retracement of that previous advance… a classic sign of distribution

Ides of May

Another form of ‘symmetry’ – or it could just be viewed as a simple ‘annual cycle’ of sorts – reinforces this time frame.  It involves the moves that have been triggered in the middle of May

Two years ago, Stock Indices 2013 was published – in the first half of May – and explained why an intermediate top was imminent… but that it would be part of an overall advance into late-2013 and ultimately into late-2014.

The Indices topped a few days later and  entered a quick, sharp drop into late-June 2013.  They then resumed their advance and fulfilled expectations for an overall advance into late-2013 and ultimately into late-2014.

Two years prior to that, Stock Indices peaked in May (2011) and entered a more pronounced correction – the topic of the 11-Week Cycle Reports – and suffered an overall ~6-month/~20% decline into late-September (the precise type of move that is currently projected by the 17-Year Cycle of Financial Crises – a 5–6 month/20% decline in May through September)…

In May 2008, the Indices set a secondary high and then plummeted into October – with the DJIA losing ~40% in that 5–6 month period.

In May 2001, the Indices set a secondary high and then plummeted into September – with the DJIA losing ~30% in that ~5-month period.

That 7-year pattern comes back into play in May 2015 (May 2001–May 2008–May 2015).

So, a 2-year, a 7-year & a 17-Year ’Cycle Progression’ of declines beginning around mid-May – all reach fruition in mid-May 2015.

However, there is another ’Cycle Progression’ – a higher multiple of the same 7-year ’Cycle Progression’ – that corroborates part of this expectation…  Simply put, the 3rd Quarter of the year (often with follow-through into October) pinpoints this uncanny cycle.  Sharp declines (30-40%) were seen in 3Q 2001 & 3Q 1987 –  creating a reinforcing 14-year ’Cycle Progression’.  That 14-year pattern comes back into play in 3Q 2015.

At that time, a 2-year, a 7-year, a 14-Year AND a 17-year ’Cycle Progression’ of declines in the 3rd Quarter of the year – all will reach fruition in 3Q 2015.  That creates some intriguing synergy.

But, it does not stop there!

Prior to the 3Q 1987 decline (28 years earlier), a related drop was seen in 3Q 1959 – lasting about 2 months…That created an overlapping 28-year pattern that ALSO goes back to 1931…

That would mean that sharp declines were seen in 3Q 1931, 3Q 1959 & 3Q 1987 – creating another corroborating 28-year ’Cycle Progression’.  That 28-year pattern comes back into play in 3Q 2015.  The synergy keeps growing!

SO… a 2-year, a 7-year, a 14-year, a 17-year AND a 28-year ’Cycle Progression’ of declines in the 3rd Quarter of the year – all reach fruition in 3Q 2015… as a new 40-Year Cycle begins.

Could there be a pattern???

May 13–20th could see the final signs of resilience and be quickly followed by capitulation.  If that is the case, and May–August 2015 produces a sharp drop in Stock Indices, it would powerfully validate longer-term analysis (for 2016–2017) and set the stage for an even bigger surprise to follow!

May–August 2015 is only the beginning!!”

  

May 13–20th Ushers in Bearish Period in Stock Indices!

May–August 2015 Projected to Trigger Sharp Drop!!

2-Year, 7-Year, 14-Year, 17-Year, 28-Year & 40-Year Cycles Corroborate.

FREE copy of INSIIDE Track40-Year Cycle – Stock-flation II Report.