DJ Transports Reinforce Lows
03/05/16 Weekly Re-Lay: “Stock Indices have rebounded since reaching extreme support on Jan. 20th and fulfilling intermediate cycles converging in late-Jan./early-Feb. 2016. As explained numerous times, that portends subsequent lows in late-April/early-May (multi-week low) and June (multi-month low)… based on related cycles.
The way in which the Indices set their late-Jan. lows provided the first corroboration to early-2016 cycles…
By spiking down to monthly HLS levels (intra-month extreme downside targets) as they were testing 2016 yearly support levels – and doing it during the opening range of 2016 (first three weeks), they set the stage for an important low.
When a market moves to one extreme (low) during the majority of its opening range – but does not follow through after that opening range is complete – it often heads back toward the opposite extreme (high), to test its strength.
The Transports have already done this and initially turned their intra-year trend up – showing that they are in a larger-degree rebound than what has been seen since Oct./Nov. 2014.
They are now matching the duration of that 4Q ’14 rally and could rebound 50% of their 2014–2016 decline…
There are other noteworthy NQ setups that should also be addressed…
Primarily is the action of the weekly 21 MAC. That channel has been heading lower and market action just brought the NQM back up to the weekly 21 Low MAC… after it failed to complete an Intra-month V Reversal higher and failed to close higher on the month.
Both of those last two factors are often followed by a little follow-through in the ensuing month (in this case, some follow-through buying)…”
Focus remains on June 2016, when the next important low is expected. The period (1–2 months) leading into that cycle low is the most vulnerable for a new decline. Watch mid-point of 5-month cycle… in early-April.