How the 2-Year Cycle & Weekly Trends Were Fulfilled With Oct. 26 Action.
How the 2-Year Cycle & Weekly Trends Were Fulfilled With Oct. 26 Action.
10/27/18 INSIIDE Track Stock Index Update: “Stock Indices plunged into Oct. 26, fulfilling the majority of the overall 2-Year Cycle and ultimately turning the weekly trends down. That has been the primary objective for this sell-off and its fulfillment is likely to trigger an initial low and 1 – 3 week bounce.
At the same time, it generates a more convincing sign of a 3 – 6 month peak (set in Sept./Oct.) and reinforces expectations for late-2018/early-2019.
Before delving into the weekly trend ramifications, or what could be seen in the coming week(s), it is valuable to review the 2-Year Cycle, what was expected in Oct. 2018, and what has been fulfilled.
As detailed in late-September, one of the most consistent cycles in equity markets is an approximate 2-Year Cycle that times related moves at a ~24-month interval. This is more likely when the market has been in a similar trend for several years, as it has in 2009 – 2018.
In 2010, 2014 2016 & 2018, the DJIA experienced similar declines bottoming on Feb. 3 – 12. Following those declines, it took 4 – 8 months to recover and eventually spike to new highs.
In 2014, that subsequent spike high immediately led to a multi-week sell-off.
In 2016, that subsequent spike high immediately led to a multi-week sell-off.
In 2018, it was projected to lead to a similar multi-week sell-off mirroring the magnitude of similar declines seen in early-2018, early-2016 and Aug. 2015. The first phase of those expectations was for an 8 – 10% drop during the first two weeks of October.
In 2012, 2014 & 2016, equity markets experienced sharp declines in Sept./Oct. with the majority of selling occurring during the month of October. The same was expected in Oct. 2018 and was corroborated by multiple intermediate sell signals.
The potential for an Oct. sell-off was corroborated in late-Sept. by the Russell 2000 turning its weekly trend down and then briefly bouncing even as the NYA & DJTA triggered sell signals before the DJIA & NQ-100.
The DJIA spiked to a new high on Friday, Sept. 21 – identifying the time for an impending sharp correction. It peaked on Oct. 3 and ushered in that expected 2 – 4 week decline – a couple days after the Nasdaq 100 had peaked on Oct. 1 while triggering a 1 – 4 week sell signal up to 7690/NQZ.
Those sell signals were quickly validated with outside-week/2 Close Reversal sell signals on Oct. 5 – projecting 2 – 3 weeks of substantial selling. 8 – 10% declines were anticipated during the first two weeks of Oct. with overall declines that could stretch into late-Oct. and compare to similar sell-offs in Jan./Feb. ‘18, Dec. ‘15/Jan. ’16 & July/Aug. ‘15 (2500 – 3300/DJIA points, or 12.5 – 16% declines).
That led to a ~10% drop into Oct. 11, after which a quick sharp rebound was forecast into Oct. 16/17. followed by another 1 – 2 week sell-off. They peaked on Oct. 17 as the NQZ remained in a daily downtrend while testing and holding weekly resistance and 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 and projecting an 8 – 11-day decline (50% – .618 of that overall cycle) into Oct. 25 – 26.
The Oct. 12 & 19 closes generated weekly closes below the flattening weekly 21 Low MACs – another particularly negative signal that had not been seen in ~22 months. That reinforced analysis for a second sharp sell-off into Oct. 26 – expected to turn the direction of the weekly 21 MACs down as an added confirmation signal.
Reinforcing that potential, Oct. 26 was the earliest the weekly trends could turn down – a signal that often coincides with an initial low. All three turned their weekly trends down on Oct. 26. All of this has provided a precise fulfillment of this uncanny 2-Year Cycle… while also completing – as of Oct. 26 – the expected reversal of the weekly trends.
With the Oct. 26 close, Stock Indices produced multiple signals of confirmation (on a 1 – 3 month basis) and potential culmination (on a 2 – 4 week basis).
As explained before, this weekly trend reversal ushers in the time for an initial multi-week low and subsequent bounce (since a weekly trend reversal is a confirming/lagging indicator that often coincides with the extreme of a first wave decline). That would then set the stage for another decline after that intervening rebound.
Short-term trend points and indicators are producing some general expectations but Monday’s action needs to hone that. One possibility, if a low is signaled in the coming days, would be for a quick rally into Nov. 2 – 9 that would perpetuate a ~5-week high-high-high-high & a 10 – 11-week low-high-high-(high) Cycle Progression in the NQ-100.” TRADING INVOLVES SUBSTANTIAL RISK!
Equities are completing the projected 2-Year Cycle (October 2018) plunge and have fulfilled almost all downside targets as they prepare for a decisive low on Oct. 26 or Oct. 29 (watch extreme downside targets at 23,913/DJIA, 2590/ESZ & 6650/NQZ). That could/should spur an initial surge into Nov. 2 – 9. The weekly trend pattern has reinforced that and ushered in the potential for a 1 – 3 week reactive bounce beginning on Oct. 29.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.