Stocks Reinforce ‘Danger Period’! Prepare for Sharp Sell-offs in 3Q ‘23.
08/07/23 – “Stock indexes entered the late-July/early-August ‘danger period’ and began to sell-off, with several of them turning their daily trends down. However, they need to reinforce that by turning their intra-month trends down (the DJIA & S+P 500 are the only ones to have briefly turned their intra-month trends down, so far).
In the interim, the daily trend reversal portends a brief, reactive bounce. (The DJTA & Russell 2000 did not turn their daily trends down, so they could rally to new highs in the short term.)
On an intermediate basis, the DJIA spiked higher on Aug 1/2 – fulfilling a ~1.5-month low-high-high-(high) Cycle Progression and a series of ~3-month (90-degree) moves from successive highs on Nov 1/2, Feb 1 & May 1, ’23. It initially sold off but needs the intra-month trend to turn down in order to validate that peak.
Coinciding with that peak, the Russell 2000 reached its 3 – 4 month upside targets (stemming from its March ’23 low) at 2000 – 2015/QRU.
The Russell 2000 attacked its monthly LHR in June ’23, reinforcing the likelihood for a subsequent peak in July or Aug ’23. (See Aug ’23 INSIIDE Track for range targets that could also be tested.) If/when a multi-week peak is signaled, the Russell 2000 could undergo a quick, sharp correction.
On a broader basis, stock indexes continue to trace out a large, multi-year topping phase that began with 1 – 2 year (or longer) peaks in late-2021/early-2022, subsequent 1 – 2 year lows in June/Sept ’22, and could be followed by [reserved for subscribers]… a cycle that has also had a remarkably strong correlation with and adherence to Middle East War/Conflict Cycles (which begin in 2023).
That 17-Year Cycle timed the previous 3Q 1990 equity peak, set as Saddam Hussein was invading Kuwait (Middle East war) and triggering what would ultimately be a pair of ’Persian Gulf Wars’ stretching out for more than a decade, AND also timed the previous Major stock market top in 1973… and a corresponding Middle East war (Yom Kippur War).
That cycle also timed multi-year stock market tops – and corresponding Middle East wars – in 1956 & 1939, ultimately dating back to 1922 when the source (or at least a source) of this series of stock market moves and Middle East wars emerged. (See Aug ’23 INSIIDE Track for more detailed analysis.)”
Stock indexes are fulfilling ongoing analysis for multi-month peaks to take hold in late-July/early-Aug ’23 and enter a vulnerable ‘danger period’ that could/should spur sharp sell-offs once trigger points are activated. As it did in Nov ’21, the Russell 2000 could be leading this transition as it fulfilled multi-month upside targets in late-July ’23 while maintaining its intra-year down/neutral trend status – setting the stage for a new multi-month decline.
It also peaked right at is converging monthly 21 & 40 High MACs – the upper ranges for its 3 – 6 month and 6 – 12 month trading ranges… providing many of the ‘ideal’ criteria for a major ‘B’ wave rally to peak and a large scale ‘C’ wave to begin. An initial decline should take it lower into the second half of Aug ’23. A subsequent bounce into mid-Sept ’23 would then usher in a second, more significant ‘danger period’.
Is the Russell 2000 the ‘Canary in the Coal Mine’… or an Outlier?
What is the significance of Monthly 21 & 40 High MACs being tested and held?
Is this a ‘Major ‘B’ Wave Peak’ in at least one key index??
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.