Stocks Reinforce Danger Period #2

Stocks Reinforce Danger Period #2;
Weekly Close Could Confirm…
Sharp 1–2 Week Drop in Nov.?

10/19/16 Weekly Re-Lay Alert – Stock Indices: Rolling Over – Part II: 

Stock Indices are slowly validating expectations for Danger Period #2 – projected to take hold right after Oct. 7th and to spur an accelerated decline (in multiple phases)… expected to be similar to July/Aug. 2015….

If it is very similar (which is NOT necessary to fulfill this analogy), the Indices would wait until November for the lion’s share of the decline.  (In mid-2015, about 75% of the overall, 3–4 month decline occurred during the final 1–2 weeks.)

One key aspect of this analysis could be clarified by Friday’s close.  As already discussed, the DJIA & S+P 500 are in a position to turn their weekly trends down (w/weekly closes below xx,xxx/DJIA & xxxx.xx/ESZ) and would need to do that to trigger more extreme downside potential for October.

A couple things are favoring that possibility.  The first is the daily trend that is now down in the DJIA, ESZ & NQZ – with each Index rebounding to their daily trend resistance.  That should spur a drop back to the recent lows.

The second is the daily 21 MAC, which has rolled over and turned down in all three Indices.  With the daily 21 MARCcontinuing to rally for the next two days, that should help spur more negative pressure from the corresponding daily 21 MACs… It would take daily closes below the Oct. 13th lows to confirm that onset of a new – and likely accelerated – leg down.

1–3 month & 3–6 month traders & investors should have sold Stock Indices on Aug. 29–Sept. 7th (~18,400–18,550/DJIA & ~2161–2182/ESZ) and [See complete 10/19/16 Weekly Re-Lay Alert for expanded analysis & specific trading strategy.]


Danger Period #2 evolving.  Stock Indices increasing parallels to July/August 2015… and could see a sharp, 1–2 week drop (90% of move?) in November.