Stock Market Sell-off Phase II; Lower High in early-Feb… Then New Sell-off.
02/02/22 Weekly Re-Lay Alert – “Stock Indices are confirming expectations for an intermediate low and reversal higher on Jan 24 – 28, after powerfully fulfilling what the 2-month, 4-month, 8-month & 2-Year Cycles had been projecting since early-May, early-Sept & early-Nov ’21 – when successive highs were set and forecast a more significant peak and reversal lower in early-Jan ’22.
The Nov/Dec ’21 sell-off corroborated that by triggering 4-Shadow Signals in most indexes and projecting sharper sell-offs after an intervening bounce. That brought equities into early-Jan. ’22 when the 2-Year Cycle had been projecting a divergent top followed by a sharp January ’22 sell-off.
In many indexes, that was expected to be the more dynamic and destructive ‘c’ wave decline after they had signaled 3 – 6 month (or longer) peaks in Nov ’21 and then experienced ‘a’ wave declines (Nov/ Dec ’21) and ‘b’ wave rebounds into late-Dec ’21… those ‘c’ wave declines could extend after the current rally is complete. (Divergence has been taking many forms in recent months.)
As stated throughout January, that sell-off should culminate before the end of January and then lead to a rebound into the first 2 – 3 days of February, when a secondary high was most likely. That is where the markets now find themselves.
One of the factors contributing to that analysis was the DJTA peaking in perfect sync with a very precise ~2-month/~60-day high-high-high-(high) Cycle Progression – previously timing highs on the second trading day of the month in July, Sept. & Nov. ’21… and doing the same on Jan 3/4, ’22. See HCP diagram above.
Since that time, that set-up was described as being capable of timing a subsequent high on Feb 2 – 4, the midpoint of that ~2-month cycle. Depending on IF and HOW that intervening peak is set, it could spur another decline into early-March ’22 – the next phase of that ~1-month cycle (high-high-low Cycle Progression) and the next phase of the ~2-month Cycle Progression.
That is where the intra-month trend – as well as the daily trend – come into play…
The DJTA would have to avoid turning its intra-month trend up, and subsequently turn that trend down, if it is to enter another decline in the coming weeks. It has twice neutralized its daily downtrend and requires a daily close above 15,758/DJTA to reverse that daily trend to up. That could occur as soon as Feb 3.
However, the intra-month trend could not turn up (or down) until the close of Feb 4, at the very earliest. Once the trading range of Feb 1 – 3 is set (in each market), a daily close beyond that range – above the high or below the low – is required to trigger a new intra-month trend. Until that occurs, the new intra-month trend is neutral.
The Nasdaq 100 is similar, having neutralized its daily downtrend twice (as of Feb 1 close) and failing to turn it up today. It would take a daily close above 15,137/NQH to do so. That is critical since the NQ-100 turned its weekly trend down in January and was expected to bottom around Jan 25 and then rebound into early-Feb.
Now that it has done that (it set its intraday low on Jan 24), the daily AND intra-month trends become vital filters for the 1 – 2 week trends. The S+P Midcap 400 and Russell 2000 are in similar setups…
The S+P 500 and Nasdaq 100 reversed their weekly trends down and are in the midst of (or at the tail end of) reactive 1 – 3 week bounces that were expected to follow…
Another potentially neutral factor is the uncanny 2-Year Cycle that has been discussed since mid-2021 and which had spurred January sell-offs (a majority being 10 – 15% declines) in 5 of the past 6 phases.
In 2010, 2014, 2016, 2018, 2020 & now 2022, stocks experienced January sell-offs with many of them (2022 included) exceeding 10% in magnitude. So, the question is whether or not the late-Jan ’22 lows will hold during the month of Feb. ’22.
Many indexes have paralleled action in 2015/2016, including 2Q ‘15/’21 highs, Aug ‘15/’21 lows, rebounds into late-Dec. ‘15/’21 and subsequent sharp sell-offs in Jan ‘16/’22. In that instance of the 2-Year Cycle, another sell-off was seen… The action in early-2022 could be like 2016. However, there is one other parallel that remains in focus and could influence the action of the coming weeks [reserved for subscribers].”
Stocks are adhering to the outlook for a decisive peak in early-Jan ’22 followed by a new multi-month plunge in 1Q ‘22. That has been expected to trigger the more dynamic (and usually more devastating) ‘C’ wave declines in Jan/Feb ’22 with an intervening (lower) high expected in early-Feb.
That is set to unfold at the same time Gold has been forecast to see an accelerated advance into late-Feb/early-March – hinting at more trouble on the horizon during the month of Feb ‘22.
The NQ-100, Russell 2000 & DJTA reached multi-month upside targets in Nov ’21 and signaled a wave ‘5’ peak on various levels – signaling that those highs could hold for many months (or longer) and trigger the largest declines since March ‘20.
How Does This Impact 10, 20 & 40-Year Cycles Colliding in 2022?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.