Stocks Enter 5-Month Crisis Period
04/22/15 W. R. Alert: “As commodities – best illustrated in the DJ-UBS Commodity Index – continue to struggle with the effects of a ~4-year (and larger ~7-year) deflationary period, many markets continue to align for major bottoms in 2015. However, as in the case of Gold & Silver, there is still more downside to be seen.
Before getting to that analysis – and the potential for ‘hard assets’ to enter a new bull market after mid-2015 – let’s look at what one of the ultimate ‘paper assets’ is doing, after completing a 40-Year Cycle of Stock-flation…
Stock Indices remain in consolidation, fulfilling the potential for a retest of their highs in line with the daily & weekly trend patterns. The next two days could see a renewed ‘battle’ take hold…
As explained in recent weeks, April 20–24th & April 27–May 1st are the decisive dates for the weekly 21 MARCs… The DJIA began the week by creating a low at 17,841… an initially positive sign…the daily 21 MARC will begin to plummet… which could turn into a positive influence IF the Indices do not see a substantial drop in the next two days. So, the battle lines have been drawn… for now.
Those two days also incorporate the latest phase of a ~60-degree/2-month high-high-(high) Cycle Progression that already includes the Dec. 26/29th & Feb. 25/26th highs. Considering the daily 2 Close Reversal higher – just triggered in the ESM and some other Indices – it would not be surprising to see some additional upside before the next decline.
That is reinforced by the fact the Indices continued to feel the expected selling pressure into April 17th… but only a couple key Indices were able to set new multi-month lows in April. Just as was seen in each of the previous, related ~90-degree cycles, the culmination of this sell-off leaves open a window of time for some reactive buying.
The big difference is that now enough time has lapsed for indicators like the weekly 21 MARC to ‘catch up’ with price and take on the potential for becoming a negative influence immediately after that bounce… a bounce that should be much briefer.
In the past phases (after the March/April, June/ July & Sept./Oct. 2014 and Dec./Jan. 2015 declines), the markets rallied more convincingly (for a longer duration and to new highs) – once that negative cyclic pressure was removed.
In this case, the Indices are quickly running into a new bout of negative/resistance factors that could/should spur a new decline… before a sustained rally takes hold.
It is a textbook progression of a transitioning trend. This also leads into the unique 32–33 week cycle revisited last September – when an intermediate peak and sharp sell-off were indicated.
That cycle – which has been a force for many years – had most recently unfolded in a 32-week low (Nov. 2012)–low (June 2013)–low (Feb. 2014)–high (Sept. 2015) Cycle Progression that would next come into play in late-April 2015… just after the mid-April cycle low. The precise date is April 28—May 1, 2015.
The Nasdaq 100 – the Index on which this 32-Week Cycle had the most precise & consistent effect – is already within the normal ‘margin of error’ for a cycle of this magnitude, so a top could be seen at any time. The action of the next two days should clarify whether the NQM rally will stretch into the precise recurrence of that cycle… next week.
At the same time, however, it would still be likely that many Indices would diverge and set lower peaks… maintaining their previous highs (stretching from late-Nov. into early-March) as their ultimate highs.
It is also intriguing that the DAX & FTSE are entering a decisive period – when their daily trends could turn down and, in the DAX, reinforce its intra-month downtrend. The next few days are pivotal, particularly since the DAX’ intra-month trend portends lower prices into month-end (with or without some consolidation in the interim).
In addition, the Dow Composite is following the lead of the Dow Transports and beginning to turn its weekly 21 MAC down. The next two days need to confirm that… a slowly evolving web of divergent tops and subsequent declines.
So, April 23rd & 24th should be consequential as the Indices begin to move through this multi-week period when the weekly 21 MACs could corroborate what has slowly evolved since late-2014. But, more confirmation IS needed.
And, this period is only one small part of the overall trend & outlook.
The next phase is leading into May 4–8th, when cycles project new multi-month lows… in at least the DJ Composite & DJ Transport Indices.
So, the gradual – and often deceptive – process of ‘rolling over’ (to the downside) continues to unfold and to do so gradually. And, the early-May cycle lows could/ should reinforce more significant (future) cycle lows in June 2015 – described several months ago.”
32-Week Cycle Remains in Force in Nasdaq 100; Fulfilling Next Phase with late-April Divergent Peak… Early-May = Critical Period.