2017 Midpoint (June/July) Approaches…

05/31/17 INSIIDE Track:

          Outlook 2017-2018

Midpoints

            05-31-17 – Midpoints are a pivotal & decisive time when either sharp (180 degree) reversals or reinforcing pivots are seen.  Much of that – and the expectations leading into those midpoints – are strongly influenced by the action leading into them.  Before elaborating on that aspect, let’s examine the general concept of midpoints…

A parallel might be found in assessing a road-trip.  In many cases, a road-trip finds its seminal transition time at the midpoint.  One might drive 300 miles to a particular destination and then, after a period of ‘consolidation’ (visiting places or people, seeing the sights, etc.), drive another 300 miles back to ‘home’… the level from which an overall trend began.  The initial destination – and the point at which a 180-degree turn eventually took hold – is the midpoint of the overall journey.

Some of those road-trips are even larger… and could be one-way.  A 1,000-mile drive to a new home (a new plateau or trading range for a market) could involve an initial 500 mile drive followed by some rest & recuperation.

That midpoint ‘reinforces’ the overall journey, or trend, and then helps propel the next 500-mile drive in the same direction… to the ultimate destination.  In many cases, it also provides the ability to assess what can be expected during the second half of that journey.

Casting Shadows

In the case of market action, cycle midpoints are often viewed in the latter perspective – that of a reinforcing move or event (like the stop for R & R in our road-trip analogy).  If/when a corroborating event occurs during that midpoint, it reinforces expectations for the culmination of the overall cycle.

For instance… If a 10-week cycle has been in play and is expected to time a future peak, 10 weeks from a recent peak, an intervening high (usually of a lesser degree) at the 5-week midpoint would reinforce that cycle.

As a result, there is a new 5-week high-high-(high) Cycle Progression corroborating the already existing 10-week high-high-(high) Cycle Progression – both of which are now pointing to that next phase of the 10-week cycle.  These cycle midpoints often ‘cast their shadows’ forward, as discussed last month (see accompanying quote).

Midpoints… and Mid-Periods

There is another, contrasting application of midpoints as well.  It involves the midpoint of a given period – often a seasonal or calendar-based period.  By this, I mean the midpoint of a given year or month… or even week.

In many cases, those midpoints act like the former (road-trip) example – in which they identify an opposite extreme from the beginning of that period.  Critical reversals are often seen near that midpoint/mid-period.

A given month often sees a particular market begin at a low point (based on the trend within that month; not necessarily the overall trend) and then rally into mid-month… only to reverse lower following that midpoint and work lower into the end of that month.  That pattern is described in Eric Hadik’s Tech Tip Reference Library – in the section on Intra-Period Reversals (beginning on page 63).

That initial intra-month move – from month-opening to mid-month – is usually signaled by the market giving a daily close above the month-opening range and turning the intra-month trend up.  On a relative basis, the same is true of individual weeks… or even years.

In the case of an intra-year move, the first three weeks of the new year represent the year-opening range.  It then requires a subsequent weekly close above or below that range to signal the initial intra-year trend.  Once that signal is triggered, it should propel the corresponding market in the corresponding direction (up or down, based on trend signal) into mid-year… the midpoint.

Decision Point

That becomes the first important inflection point – determining whether that intra-year trend should reverse (creating an Intra-Year V or Inverted V Reversal) or should continue into late-year (creating an Intra-Year X-X move).  It is a point to search out potential ‘shadows’ being cast ahead.

And that is where the markets now find themselves, entering the broader measure of ‘mid-year’ – the two central months of the year (June & July).  That quickly ushers in the more precise measure of ‘mid-year’ – the ~4-week period from mid-June through mid-July.

In the case of markets that have trended since January, this impending period could time a multi-month reversal.  The Dollar Index is a perfect case, having steadily moved lower all year.  It could be setting up for a multi-month bottom.   Several equity indexes are the opposite.  [More on that in the corresponding Market Analysis Section.] [See June 2017 INSIIDE Track for full details]…

 

Stock Indices enter crucial mid-2017 period (June/July 2017) when intra-year uptrend is most likely to peak.  Equities fulfilled intermediate cycles projecting a 1–2 month drop in March/April 2017 but failed to turn intermediate trends down.  The next important cycle low is expected in Sept. 2017 – the latest phase of the 5-month low-low cycle (and midpoint of corresponding 10-month low-low cycle) that has governed equities for almost 3 years.

Upside price targets remain in force (at 21,616–22,030/DJIA & 2465–2531/SPX) and are likely to be tested before a final peak becomes more likely.

Three uncanny longer-term cycles should be in negative phases by the end of July 2017 –  including the 40-Year Cycle (negative in 3Q/4Q 2017), 17-Year Cycle (downturn in March 2017–Oct. 2019) & 10-Year Decennial Cycle (likely sell-off in July–Nov. 2017, potentially stretching into March 2018).    See Weekly Re-Lay & INSIIDE Track for additional details.