3Q ‘18 Topping Process in Motion; DJIA Lagging But Could Still Retest Jan. ’18 High.
3Q ‘18 Topping Process in Motion; DJIA Lagging But Could Still Retest Jan. ’18 High.
08/29/18 Weekly Re-Lay Alert – The Energy/Equity Connection II: Stock Indices continue to move progressively higher (as do energy markets; see 8/22/18 Alert for related details on this ongoing correlation) after fulfilling the potential for a 3 – 6 month or longer bottom in March 2018… Based on the weekly trend patterns, most indexes have projected a rally back toward the early-Jan. highs after failing to turn those weekly trends down during the decline into early-Feb. and/or the subsequent decline into late-March.
The S+P was the latest to fulfill that (after the NQ-100 did it much sooner) – spiking to new contract highs this week and fulfilling that weekly trend signal. The DJIA (as well as the NYSE, MMX and others) remains below its Jan. high.
[Ironically, or not, the NYSE Index – comprised of 1900+ stocks listed on the NYSE – is the weakest of these indices but did just finally exceed its late-Feb. secondary high.
While that does NOT alter the technical structure of the other indexes, it does reinforce the struggles that many stocks have encountered since late-Jan. It also highlights the disproportionate impact that 3 – 6 stocks have had on the other indexes throughout 2018.]
The weekly LHR & HLS indicators continue to play a key role in equities and are nearing another important juncture. Two decisive, and contrasting, examples of this are converging in the current week…
The first example involves the DJIA & S+P pulling back into mid-August – fulfilling their intra-month downtrends and bottoming during the ideal time for an intra-month low – testing and holding their weekly HLS levels while also attacking weekly 21 High MAC & MARC support (synergy).
At the time, they had twice neutralized their daily uptrends, but did not reverse those trends down, increasing the likelihood for a multi-week bottom and subsequent rally back to the highs. Once the weekly HLS had held and the market reversed, the next objective (based solely on this indicator) is a test of a contrasting weekly LHR.
The Nasdaq 100 is close to achieving that with its weekly LHR coming into play at 7682/NQU, extending its advance into month-end (beyond short-term cycles) after turning the intra-month trend back up.
There is another reason that is intriguing…
As explained in early-Aug., some key stocks (AMZN, MSFT and others) had spiked to their weekly LHR levels and held. That test ushered in a short-term peak while projecting a 1 – 2 month peak to take hold within three weeks of that test (see related diagram). That 3-week period matures on Aug. 31.”
Stocks are validating analysis for a topping process in 3Q 2018 followed by a substantial decline in 4Q 2018. The Indexes are poised to set 2 – 4 week peaks in late-August, just as the S+P 500 is signaling an extremelymature bull market. The NQ-100 and key tech stocks are projecting significant peaks.
DJIA could still retest Jan. ’18 high but remains on track for late-year drop to 22,100/DJIA – its primary downside target for 2018. Look for precarious period in 4Q 2018, with secondary (lower) peaks likely in late-Nov./early-Dec.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.