Stocks Poised for Sharp Declines
06/18/16 Weekly Re-Lay:
“Stock Indices are entering ‘crunch time’ – the time to ‘put up or shut up’, with regard to the potential for another significant, intermediate decline. In a similar manner to the two previous declines, they have vacillated within range of their peaks for almost two months… before entering a convincing decline.
In those past instances, the majority of the decline occurred during a 2–4 week period – leading into intermediate cycle lows. With similar cycle lows coming into play in late-June–early-July (~5 months from the late-Jan./early-Feb. lows that were ~5 months from the preceding late-Aug./ early-Sept. ’15 lows), the Indices are in a similar window of time when a sharp drop is more likely.
The DJ Transports are again leading the way and looking like they could enter an accelerated decline in the coming week(s)… IF they can close below this past week’s low (7,440/DJTA). That low retested the high of the year-opening range (7,491/DJTA) – and the early-March pullback low – without closing below either. That extended this decline to almost two months in duration.
The Nasdaq 100 is also on the brink of a breakdown signal, needing a daily close below 4265/NQU to confirm a ‘3’ (or ‘c’) wave decline. Meanwhile, the Russell 2000 is rolling over after fulfilling a very consistent 6-month/~180-degree cycle – and a 50% rebound in time – with its June 8th peak…
With the Indices entering a week that also has some fundamental focus (Brexit vote), there could be increasing volatility… and always the chance for surprises. With so many Indices at make-or-break points, they need to signal further weakness to confirm the potential for add’l downside.
1–3 & 3–6 month traders & investors could have re-entered the short side of Stock Indices at 17,912–18,016/DJIA, 2077.5–2105.25/ES & 4378–4545/NQ and should [reserved for subscribers only]…
40-Year Cycle Update: On June 5, 1975, The UK voted to remain in the European Common Market – with about 2/3 in favor of that outcome.
40 years later – almost to the week – on May 28, 2015, the UK Parliament authorized the holding of a referendum on remaining in – or exiting (Brexit) – the European Union… the result of a large contingency pushing for this vote.
Once again, the 40-Year Cycle so precisely timed seismic shifts in geopolitics, human behavior and economics. The results of that referendum should be known in the next week… and could hasten related expectations for 2016/2017 – based on the ubiquitous 40-Year Cycle.”
[See June 2016 INSIIDE Track for additional analysis on why a UK & British Pound Crisis is expected in 2016/2017 and why a vote on Brexit would likely accelerate those cycles… and also validate projections for a sharp drop in global equity markets in late-June.]