Stock Trading: 2-Year Cycle Concurs – Mid-June Bottom Likely!
06/16/22 INSIIDE Track Stock Index Update – “Stock Indices have plunged into mid-month after peaking in line with short-term cycle highs on May 27 and then June 3/6 – when a 1 – 2 week high was projected. They are repeating the pattern of many previous months – setting initial highs in the first 3 – 4 trading days of the new month and then dropping to new lows. They are also closely adhering to the 2-Year Cycle and its uncanny correlation to 2016 and the timing of so many extremes (highs or lows) and intervening swings.
In recent months, they were forecast to set another decisive peak on April 19 – 21 before turning back down. That was the convergence of multiple current cycles as well as the time (April 20, 2016) when stocks peaked in 2016 (2-Year Cycle connection). That led to a sharp drop into May 20 – the same time that stocks set a multi-week low in 2016 (May 19, 2016).
In 2016, stocks rallied from May 19 into May 27 and then June 8 before dropping into June 16.
In 2022, stocks rallied from May 20 into May 27 and then June 3 before dropping into June 16.
From a trend perspective, most indexes have dropped to new lows after rebounding enough to twice neutralize their weekly downtrends on June 3 but failing to turn them up. That peak came right at the declining weekly 21 Low MACs – reinforcing the significance of pivotal resistance at the June 3 highs. It also allowed most indexes to rebound during the first three trading days of the new month… and then reverse lower without being able to turn the new intra-month trends up.
From a 6 – 12 month perspective, the Russell 2000 is spiking below its 6 – 12 month downside target (~1710/QR) but should not give a weekly close below that level if it is going to continue holding. This latest sell-off is giving the Nasdaq 100 the opportunity to attack its corresponding 6 – 12 month downside target near 11,000/NQ (10,700 – 11,100) – where it will have reached its yearly HLS, retraced 50% of its Dec ’18 – Nov ’21 advance, and tested the Sept/Oct ’20 lows – a type of 4th wave of lesser degree support.
It is also multi-year range-trading support tied to the NQ-100’s trading ranges of the past 20 years with multi-year lows set near 1,000, 6,000 & 11,000 and its major high near 16,000.
At the same time, the DJIA is attacking its most important level of resistance turned into support – the level of the Feb ’20 and Aug ’20 peaks at 29,200 – 29,600/DJIA.
From the perspective of the ~8-Month Cycle – that precisely timed the early-Jan ’22 peak – stocks are nearing the second time when an intervening multi-month low is most likely. Depending on the bearishness of the interim decline (from the 8-month cycle peak), a market will often decline for at least 1/2 of that cycle (4 months) and potentially for 2/3 of the cycle (~5.5 months).
In the former case, that means the ensuing rebound – into the next phase of the 8-Month Cycle – would equal the duration of the decline (4 months down/4 months up). In the latter case, that means the ensuing rebound – into the next phase of the 8-Month Cycle – would equal 50% of the duration of the decline (~23 weeks down/~11.5 weeks up).
Stocks fell for 4 months, fulfilling the first timing objective, but quickly dropped below that low – showing a longer and more bearish scenario. That has brought them to the second possibility. A low at this time (June 13 – 20, which is also in sync with a pair of daily cycles) would fulfill that second alternative – declining ~5.5 months or ~23 weeks from the early-Jan ’22 peak.
As continues to be the case, price action is the ultimate filter and stock indexes would eventually need to reverse their weekly trends up (which takes at least three weekly closes after the low to accomplish) to signal that anything more than an intermediate (3 – 5 week) bottom is intact…
Once the weekly trends turn up and a multi-month low is confirmed, stocks should provide a clearer outlook for what to expect from the next cycle high in Sept/Oct ’22.”
Stock indexes are poised for a mid-June low and the onset of a subsequent multi-month advance. They have reached 6 – 12 month downside targets – the overwhelming majority of downside potential for the first 9 months of 2022. Focus is slowly shifting to Sept ’22 and what could be the most pivotal time of this year.
On a broader basis, stocks powerfully fulfilled projections for a decisive peak in early-Jan ’22 followed by a multi-month plunge to begin 2022. That is just the start of a massive shift projected for 2022 – ultimately leading to market jolts in late-2022 through late-2023. An overall 4 – 5 month decline was/is expected between that Jan ’22 cycle peak and the next (Sept/Oct ’22) cycle peak. Ideally, it would bottom on June 13 – 21!
Why Would a Mid-June Bottom Validate the ~8-Month Cycle?
Why is Sept ’22 Such a Key Period in the 2022/2023 Outlook??
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.