How the 2-Year Cycle (& 2CR Signal) Projected an October Plunge in Stocks.
How the 2-Year Cycle (& 2CR Signal) Projected an October Plunge in Stocks.
10/10/18 Weekly Re-Lay Alert – Intra-month Trends and the 2-Year Cycle: “The intra-month trend pattern was expected to be a determining factor in October – projected to help trigger a sharp decline… Several other factors preceded that, like an uncanny 2-Year Cycle that projected a sharp plunge in stock prices… expected to resemble the drop seen in late-Jan./early-Feb. 2018.
Like any technical (or fundamental) indicator, the intra-month trend indicator has significant limitations that must be supplemented by – or compensated with – other indicators. On its own, it only provides a few basic conclusions and expectations. So, try to keep it in context and view it in proper perspective.
The intra-month trend (up, down or neutral) is determined by a daily close outside of the price range of the first three trading days of the month…
Stock Indices are one of the markets that are adhering to this principle, turning their intra-month trends down as soon as it was possible (Oct. 4) – while reinforcing bearish expectations for the first 2 – 3 weeks of October.
That was corroborated when all three indexes completed outside-week/2 Close Reversal sell signals on Oct. 5 – projecting acceleration to the downside this week. That could still continue.
Several indexes have broken below 2 – 4 week and 1 – 3 month support, confirming that a larger-degree decline is unfolding – in line with expectations for a sharp drop that could be similar to early-2018 and several previous 2 – 4 week declines of similar magnitude.
All of this is fulfilling ongoing analysis for at least a 5 – 10% sell-off in Sept/Oct. – when a consistent 2-Year Cycle came back into play (focused on the first two weeks of October). A larger decline is possible.
In 2012, 2014 & 2016 (as well as in 2008), equity markets peaked in early-to-mid-Sept. and then corrected for 4 – 6 weeks. In each case, those declines overlapped the first 3 weeks of October. (They also experienced related 3-week sell-offs from mid-Sept. into early-Oct. – in 2011 and 2013.)
This 2-Year Cycle has consistently timed sharp corrections that usually see their accelerated phase at some point in Oct., primarily in the first half of the month.
The potential for an Oct. sell-off was corroborated in late-Sept. by the Russell 2000, NYA & DJTA – pinpointing the final 10% of their expected low – low cycle (late-March – late-Oct. 2018) as the time that was most likely for an accelerated decline. That is unfolding, right on cyclic schedule, and the coming days could be decisive.
An additional level to watch is the monthly HLS at 25,343/DJIA with 2 – 3 month support and weekly 21 MARC support coming into play just below 25,000/DJIA.
The S+P has weekly 21 MARC support and intra-year trend support coming into play around 2700/ESZ even as the NQZ is breaking below its weekly HLS (7008). Weekly 21 MARC support (which needs to be broken to signal a larger-degree decline) is at 6887/NQZ.
With the intra-month trends solidly down, this decline maintains the potential to stretch out for at least a couple more days. For now…
1 – 4 week traders could be holding short positions in Dec. mini-Nasdaq 100 futures from an avg. of 7650, w/avg. open gains of about $13,000/contract. Move trailing buy stops to [reserved for subscribers].” TRADING INVOLVES SUBSTANTIAL RISK!
Equities are initially fulfilling the 2-Year Cycle projections for a sharp (10 – 15%) sell-off in October that is expected to usher in an important (1 – 3 month) low in late-October – in sync with cycles that have been discussed throughout 2018. Several indexes are nearing the 1 – 2 week downside targets for the initial phase of this decline.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.