August ’19 Projected Stock Plunge II: 2018/2019 Continues to Mimic 1978/1979! What is the Connection and Why Does This Project Sharp Sell-off Now??
07/31/19 INSIIDE Track –
Market Barometers
Generally speaking, the stock market anticipates economic movement 3 – 6 months in the future. So, any concerns about 3Q & 4Q activity could be quickly priced into stocks… and not in a good way.
Cycles and technicals also anticipate future price movement. And the period of Aug./Sept. ‘19 is considered the most vulnerable period in 2019.
That is not due to just one or two factors, but rather the synergy of many corroborating ones. From the broadest (and therefore most general and least precise) perspective, there are the expectations based on the 40-Year Cycle and the unique parallels between 2018/2019 and 1978/1979.
Stock indexes continue to trace out a pattern similar to what they did in 1978/1979. (Other parallels include similarities to US/Iran relations in 1979 and the latest phases of China’s unique 40-Year Cycle.) On an overall basis, the period of 2018 – 2022 was forecast to experience at least four corrections of 10 – 20% during this period – just as in 1978 – ‘82 – with powerful rallies surrounding those declines.
On a little more precise basis, 2018 traded in very similar action to 1978 – exactly 40 years prior.
In 1978, the DJIA set a 6 – 9 month bottom in February and then rallied into Sept./Oct. ‘78. In early-Oct., equity markets reversed lower and dropped sharply (15 – 20%) into/through Dec. ‘78.
Similarly, 2018 saw a 6 – 9 month bottom set in Feb. followed by a rally into Sept./Oct. ’18 In early-Oct., equity markets reversed lower and dropped sharply (15 – 20%) into/through Dec. ‘18.
In 1979, the DJIA rallied – in three distinct waves – throughout the first quarter, peaking in April ’79 and then selling off for a month.
In 2019, the action was similar (not exact, but similar… history rhymes, it does not repeat).
Following that ~month-long sell-off (1979), the DJIA rallied to new intra-year highs into 3Q ’79 – ultimately retesting the 1 – 2 year peak it set in Sept./Oct. 1978.
In 2019, the DJIA is acting similarly – rallying to new intra-year highs into 3Q ‘19 (after a one-month sell-off) and retesting the peak it set in Sept./Oct. ‘18 as key indicators begin to flash warning signs.
In 1979, the retest of the previous year’s peak resulted in a new 1 – 2 month sell-off that was similar – but not quite as damaging – as the 4Q 1978 decline.
In 2019, expectations are similar – based on a host of other indicators and cycles. Stocks are retesting their previous year’s high (the Sept./Oct. ‘18 peaks) and are expected to see a new 1 – 2 month sell-off – with current cycles and related timing indicators portending a low in Aug./Sept. 2019.
It is important to re-emphasize that this is NOT solely an expectation that the market will repeat what it did 40 years ago. That is rarely the case. However, this ~2-year period – in 2018 – 2019 – possessed so many other similarities and so many corroborating cycles and indicators – that the parallels could not be ignored.”
40-Year Cycle projects sharp decline in Aug. ‘19… with a Aug. ’15-style sell-off increasingly more likely! Why could August ’19 look like Aug. ‘15? What does this bode for Sept. – Dec. 2019??
NYSE projects July 29 – Aug. 5 (initial) sell-off and likely start of projected August plunge in stocks. Bounce into Aug. 9/12 should trigger second sell-off. DJ Industrials reinforce projected sell-off from mid-July into Aug. 19 – 30 (daily cycles should hone this to more specific dates).
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.