August ’19 Stock Plunge Complete? Stocks Spike Lower & Project 2 – 4 Day Rally; Fulfilling Weekly Cycle Lows. Bullish Divergence Concurs.
08/26/19 INSIIDE Track Stock Index Update: “Stock Indices spiked lower into Aug. 26 and then rebounded on news that US/China trade talks might soon resume. This spike low allowed the indexes to fulfill expectations for another sharp 3 – 5 trading-day drop… This is the 6th decline of 3 – 5 trading days (since June 20), all with intervening rebounds of 2 – 4 trading days.
There was plenty of divergence at this latest low with indexes like the Russell 2000 spiking to new 6+-month lows (already dropping 11+% from its early-May peak) and reaching the lowest levels since mid-Jan. with the Transports doing the same thing on Aug. 23 (a ~13% drop from their late-April peak)… even as most indexes retested and held their Aug. 5/6 lows – perpetuating the ongoing congestion and exhibiting continued resilience.
They will not signal a higher magnitude decline until they can give daily closes below those Aug. 5/6 lows.
At the same time, the weekly trends also remain in congestion after undergoing sharp declines. The primary stock indexes have generated multiple neutral signals against their prevailing weekly uptrends but need weekly closes below 25,440/DJIA, 2775/ESU & 7224/NQU to reverse those trends to down.
That is what it would take to propel them to more important support and downside targets. In contrast, a failure to do that on Aug. 30 would show more convincing resilience and signal that this particular correction (which was forecast to last into Aug. 19 – 30, when DJIA weekly cycles converge) is complete and a new set of intermediate signals would need to be generated to trigger additional downside. (Daily trends would need to turn up to signal a multi-week rally.)
In the short-term, weekly resistance levels (reprinted above) should be monitored leading into mid-week.”
Stock markets fulfill latest 3 – 5 day sell signal and create positive divergence at lows. ~12-Week Cycle Progression in stock indexes focused on Aug. 26 – 28 for multi-week low. How far could stocks rally? When is next intermediate peak expected??
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.