Stocks Adhering to 2015-’16 ‘Roadmap’
11/30/15 INSIIDE Track: “– Stock indices fulfilled the first phase of 2015/2016 Crash Cycles & then entered sharp rebounds, reinforcing the parallels to 2000/2001. The next (bearish) phase is expected to take hold after mid-Dec…
Stock Indices – after fulfilling the ’Capitulation Phase’ of the 40-Year Cycle of Stock-flation (that projected the sharpest declines in May–August 2015, immediately after the last phase of the 32–33 Week Cycle peaked), the 17-Year Cycle of Stock Corrections & a related 7-Year Cycle of double-digit (%) declines beginning in May – have since rallied and continue to follow the 2015/2016 Roadmap discussed in Nov. 2014.
That (general) overview of what was expected has been revisited a few times, but it is worth reiterating the highlights since they apply to the more bullish period of late-Sept. through year-end…
From there, the Indices could trend downward and see a sharp decline into August–October 2015, completing an overall 20+% decline…That could be the culmination of an initial down phase.
In their all-too-often manner, the Indices could then see a sharp rebound in/into 4Q 2015. The DJIA could recover into year-end…potentially closing near ‘break-even’ for the year… or even up a couple points, for good measure. The 2015 close would be positive… even if only by a few points.
[To reiterate, a look at the swings between Jan. 2000–March 2002 give an interesting analog…if you act as if Feb. 2000 & Feb 2001 are the equivalent of Dec. 2014 & Dec. 2015, since this scenario entails a Nov. 2014 peak instead of a Jan. 2000 peak, a similar scenario unfolds, where the year-to-year trend from Feb. 29, 2000 to Feb. 28, 2001 is positive… in the midst of a developing, 2+ year bear market. Even 1966–1974 has a lot of similarities, except for the fact the 1973 peak was slightly above the 1966 peak.]
To close out this scenario, 2016 (The Golden Year) would arrive…and Gold/Silver could be forming a base… and then the next phase of a stock market decline unfolds… much like the declines of 2000, 2001 and ultimately 2002.
If current expectations for 2016 are accurate, Gold & Silver would begin to move higher, Dollar uncertainty would grow (& potentially accelerate), perhaps a more serious event accelerates the global move away from the Dollar and… all of a sudden, investors realize that paper assets priced in US Dollars are a bit more tenuous then they originally seemed. A slightly more accelerated rush to the exits would then take hold (in 2016 or later)…
When market historians look back, the DJIA would have adhered to both of its 4-year bullish cycle expectations… Even as a bear market was unfolding. In fact, those positive events (closing higher on April 30th and on Dec. 31st) could be touted as another reason for investors to maintain blind faith in paper assets and ‘hold for the long haul’… and then the decline accelerates in 2016–2017.
The DJIA 4-Year (Election) Cycle would have been right. The DJIA ‘6-month/post-mid-term election cycle’ would have been right. The DJIA Pre-Election Year Cycle would have been right. And, the 40-Year Cycle of Stock-flation (and my interpretation of it) would have been right. No contradiction at all. However, a LOT of different context… and a lot of different expectations… and a surprise result. The two seemingly contradictory analyses would merge into one.”
So far, the ‘merging’ is right on track. The Indices did see another rally into April 30th and then dropped sharply into/through August.
As soon as bearish cycles matured – in late-Sept. ‘15 – the projected ’4Q 2015 advance’ took hold and has been influencing the Indices ever since. The next landmark on this ’Roadmap’ is for (some) Indices to close positive at the end of 2015… even as an overall, larger-degree bear market is evolving.
[Keep in mind this does NOT mean the Indices should continue rallying into year-end… only that some should close near or above their corresponding 2014 yearly closing levels – at year-end. The NQ futures could drop ~400 points – from current levels – and still fulfill that ‘landmark’. So, don’t read more into it than what is stated.]
32–33 Week Cycle (mid-Dec.)
As discussed before, I have been viewing equities on an approximate 4-month basis (which equates to about 1/2 of the 32–33 Week Cycle). The end of 2014 was ‘Culmination’, 1/3 2015 represented ‘Distribution’ and 2/3 2015 was targeted for ‘Capitulation’ in May–August. The final third of 2015 was pegged for ‘Vacillation’ – as the Indices swing wildly between extremes.
That final 4-month period overlapped expectations for bearish cycles to extend into late-Sept. and for a powerful advance in 4Q 2015 (that would bring some Indices back to the closing levels of 2014 and/or the closing levels of April 30, 2015).
Those more specific projections highlighted the more general expectation for a 2015–2016 decline to look a lot like 2000–2002, when most sharp declines were quickly met with (almost) equally powerful rallies.
Helping to time two decisive highs in 2015, the 32–33 Week Cycle remained in force. That cycle timed the Nov. ’12, June ’13 & Feb. ’14 lows and was projected to time subsequent highs in late-Sept. ’14, late-April/early-May ’15 & mid-Dec. ’15. It fulfilled the Sept. ’14 & April/May ’15 highs and remains on track for a subsequent, mid-Dec. ‘15 high.
That 32–33 Week Cycle was most precise in the Nasdaq 100, so a mid-Dec. 2015 peak could be seen in that Index, even if others peak earlier. That is why it has been emphasized that the ‘real trouble is likely to wait until after mid-Dec.’ (similar to how the initial trouble waited until after late-Apr./early-May ‘15) – when new bearish cycles begin again.”
Stock Indices continue to adhere to the overall scenario described in 4Q 2014, when the Roadmap for 2015/2016 was first published. After a projected 20% decline in the middle third of 2015, equities were projected to see a strong advance to begin 4Q 2015 before entering a more damaging period immediately after mid-Dec. 2015. From a slightly larger-degree perspective, 2016 is still expected to resemble 2001 – with the first 6–9 months perpetuating the volatile swings within a wide trading range. All of that sharpens the focus on late-2016, when a more sustained decline would become more likely.