Why the 2-Year Cycle (& Daily Trends) Projected Equity Plunge into Late-Oct. ‘18.

Why the 2-Year Cycle (& Daily Trends) Projected Equity Plunge into Late-Oct. ‘18.

10/24/18 Weekly Re-Lay Alert:Stock Indices are fulfilling the overriding potential – reinforced by the action of the weekly 21 MACs – for this correction to be on par with similar corrections in Jan./Feb. 2018, Dec. ‘15/Jan. ’16 & July/Aug. 2015.  That was/is expected to spur a drop to ~xxxx in the Nasdaq 100.

In the case of the DJIA, those corrections ranged from 2500 – 3300 points, each representing about 12.5 – 16% declines, and could be repeated now.

With respect to the 2-Year Cycle, similar Sept./Oct. corrections were seen in 2008, 2010, 2014 & 2016 and lasted 3 – 6 weeks.  In 2011 & 2013, intervening corrections were seen during the same period and each lasted about 3 weeks.

Since the DJIA’s Oct. 3 peak, immediately after fulfilling its weekly trend pattern and spiking to new intra-year highs, this decline has lasted 3 weeks.  Since that is the minimum duration of the 2-Year Cycle declines, more downside is still likely.  And, these indexes still need to turn their weekly trends down in order to confirm a larger-magnitude peak.

All three have neutralized their weekly uptrends at least two times.  They need weekly closes below 24,899/DJIA, 2745/ESZ & 6907/NQZ to turn those weekly trends down.

The earliest that can occur is Oct. 26.  If it were to transpire, that would usher in the more likely time (the following 1 – 2 weeks) for a reactive bounce even while projecting a future leg down.

For the current week, the extreme downside targets (weekly HLS levels) come into play at 23,913/DJIA (lines up with 3 – 6 month support at 23,997/DJIA), 2590/ESZ & 6650/NQZ.  If those levels are tested… it would reinforce the potential for an imminent low and rebound.

On a 1 – 3 month basis, these indexes could make it down to their early-year lows – the 4th wave of lesser degree support (and target) on a 2 – 3 year basis.  The DJTA – which again led this reversal and decline after peaking on Sept. 14 – is nearing its corresponding target at ~9,800/DJTA.  A violation of that low would signal a decline of a higher magnitude.

The Russell 2000, which even led the DJTA by peaking on Sept. 4 and providing escalating sell signals in September, is also nearing its early-2018 low.  And, the weakest of all – the NYA or NYSE index – has just set new lows for the year after peaking well below its late-Jan. 2018 peak.

The ESZ & NQZ have already fulfilled analysis for the weekly 21 MACs to turn down – for the first time since Jan. 2016.  That confirms the pattern described last week where both indexes closed for two consecutive weeks below their flattening weekly 21 MACs. – for the first time since Jan./Feb. 2016.   The DJIA needs to drop below 24,247 to turn its weekly 21 MAC down.

On a short-term basis, equities have remained in daily downtrends since turning those trends down in early-Oct.  They have not even come close to neutralizing those downtrends, reinforcing the potential for a second leg down in the second half of October.  That is now unfolding, validating other aspects of the 2-Year Cycle.

Stock indices have sold off since peaking on Oct. 17 – as the NQZ tested and held weekly resistance and fulfilled the objective for a quick, sharp rebound while attacking its descending daily 21 Low MAC.  That peak perpetuated a 15 – 17 day low (7/30) – low (8/15) – high (8/30) – high (9/14) – high (10/01) – high (Oct. 17) Cycle Progression – validating those price targets.”   TRADING INVOLVES SUBSTANTIAL RISK!


Equities continue to fulfill the 2-Year Cycle and are validating the likelihood for another 1 – 2 week sell-off into late-October – when a decisive low is expected (watch extreme downside targets at 23,913/DJIA, 2590/ESZ & 6650/NQZ).  The weekly trend pattern is corroborating that and ushering in the potential for an important low on Oct. 26 or 29 – the same time that daily cycles project a bottom.

Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.