Bearish Stock Cycles Fulfilled in late-Sept. ’15
09/30/15 INSIIDE Track: “Stock Indices have fulfilled the majority of what was forecast for the middle half of 2015 – between late-April & late-Sept. 2015 – when a 20% correction had been expected. That conclusion was drawn (in 2013–2014) from a host of cycles, technical indicators and wave analysis.
From a cycle perspective, that projection was an important phase of the overall outlook for 2015/2016 (Crash Cycles) and incorporated the 40-Year Cycle of Stock-flation, the 17-Year Cycle of Financial Crises, the 17-Year Cycle of Stock Corrections, the ~7-Year Cycle of Stock Market Peaks & the 7-Year AND 14-Year Cycles of Stock Crashes (see 1973, 1987, 2001 & 2008).
Reinforcing those multi-year & multi-decade cycles were the 15–16 Month (~66-Week) Cycle – that projected a high for late-April/early-May 2015 – and the related 32–33 Week Cycle that projected a peak during the weeks of April 27–May 1st and May 4–8th, 2015.
So far, the Indices have adhered closely to that scenario, including events in Dec. 2014, April 2015 and the period from May 2015 into the present – when a primary decline was projected.
While this is the time when that 5–6 month bearish period would reach fruition, it is NOT the only bearish cycle impacting the markets. That is why another wave down is soon expected. As context, it is good to take a broad look at 2015…
First, there is the bigger-picture outlook for late-2014 to complete a 40-Year Cycle of Stock-flation (from the late-1974 bottom) and steadily usher in a multi-year period of ‘deflating’ equity prices as Stock Indices enter a bear market. As already detailed, the DJTransports – which have led almost every major move of the past 20 years – peaked in late-2014.
Corroborating that, MANY big-named stocks peaked in 4Q 2014 – precisely when the 40-Year Stock-flation Cycle peaked – and have suffered 15–30% (or greater) losses in 2015.
These include names like Microsoft & Yahoo, Johnson & Johnson and Procter & Gamble, Coca Cola & Pepsico (though its high was retested as recently as August), Intel & Micron (70+% loss), Applied Materials & Alcoa, ADM… and dozens of others. Everyone has powerfully confirmed the initial deflating of this 40-Year Cycle.
There is another Index – very comparable to the DJIA – that best represents this. It is the Major Market Index, comprised ofAmerican Express, Boeing, Chevron, Dupont, Disney, Dow Chemical, GE, HP, IBM, Johnson & Johnson, JP Morgan, Coca-Cola, McDonald’s,3M, Merck, Microsoft, Procter & Gamble, Wells Fargo, Wal-Mart & Exxon/Mobil.
The MMI set a double peak in Sept. & Dec. 2014 – perfectly fulfilling the 40-Year Cycle of Stock-flation – and has seen a 19% loss from its highs.
The interesting thing about that Index is its wave structure. In late-July, the MMI broke below its Jan. ’15 low – confirming an intra-year downtrend just as the Indices were entering the phase when acceleration lower was expected (immediately following an Aug. 3–7th rebound peak).
Its accelerated phase kicked in on Aug. 20th, when it dropped below its Oct. ’14 low. Within days, it was plummeting below its Feb. ’14 low – producing the rare negative pattern recently discussed for the DJIA (when an Index drops below the low of the previous year… something seen only a handful of times in the past 30 years).
And, just for good measure, the Major Market Index also spiked below its June ‘13 low. (It now needs a monthly close below 1558/MMX to turn the monthly trend down.) While all of that powerfully validated the 40-Year Cycle & fulfilled the primary 17-Year Cycle analysis, it also created an intriguing resistance level for the weeks & months to follow…
Simply put, a rebound to ~1740/MMX would provide a decisive validation point for the new downtrend. That is where the MMI would complete a 50% rebound AND attack the Oct. ’14 low – a critical level of support turned into resistance. As it rallied into mid-Sept. – when daily cycles projected an intermediate peak – the MMI almost made it to that level, peaking at 1716/MMX. This resistance should be monitored during any subsequent rallies.
While all of those stocks & Indices have fulfilled the initial 40-Year Cycle expectations for a late-2014 peak and sharp drop in 2015, there are also those that have powerfully fulfilled the 17-Year Cycle analysis for a drop of ~20%, between late-April & late-Sept. 2015…
For instance, there is the host of global Indices that have convincingly confirmed that projection – including European (DAX, FTSE, CAC & the EUX, which just spiked to new lows on Sept. 29th, losing nearly 20% from its late-April peak) & Asian Indices (Shanghai Composite – which is trading dangerously close to breakdown support, Hang Seng & Nikkei – which has now lost 19% with the Sept. 29th low),.
Along with that collection of international Indices dropping into Sept. 29th, the Russell 1000, 2000 & 3000 also spiked to new lows on Sept. 29th.
So, we have one of the ‘smallest’ Indices (MMI) – comprised of Major bellwether corporations – fulfilling the Major bellwether cycle (40-Year Cycle) and some of the largest Indices (Russells) and most diverse array of Indices (globals) precisely fulfilling the 17-Year Cycle that has been a global phenomenon.
Last month, I also detailed some ‘proxy’ stocks I monitor (like SBUX, AAPL & FB) that experienced drops of 29%, 32% & 27% – leading into intermediate cycle lows in late-August. The bottom line is that all of these markets – Indices & individual stocks alike – have convincingly fulfilled expectations for late-April–late-Sept. 2015 AND powerfully validated the overall outlook for 2015/2016.
…On an intermediate basis, the ~60-degree cycle – that has timed highs in mid-May, mid-July & mid-Sept. in several Indices – recurs in mid-November and could be a pivotal period…the 3–6 month (bearish) outlook has been mostly fulfilled and could usher in a multi-month period of volatile congestion… until a new signal is triggered.”
Major Market Index, Japan’s Nikkei, Hong Kong’s Hang Seng, German DAX, British FTSE, French CAC-40 & European EUX join otherStock Indices in fulfilling downside objectives (~20% declines in 2015), as bearish cycles bottom in late-Sept. 2015. Intensifying ‘trouble’ expected after mid-Dec. 2015.