DJIA Triggers Sell Signals; NQ At Upside Targets & Cycle High.
DJIA Triggers Sell Signals; NQ At Upside Targets & Cycle High.
06/20/18 Weekly Re-Lay Alert – Buy the Rumor… ???: “A well-known trading adage advises ‘Buy the Rumor, Sell the News’ – summarizing the principle that markets are driven by expectations (as opposed torealizations). When an expectation takes hold, traders pile in to a specific market in anticipation of the bullish – or bearish – impact it will have.
However, when the actual event comes to fruition, there is no one left to buy the market. Anyone that waited for the confirming news (the so-called ‘Johnny-come-latelys’) might help create a final spike high but then the bulls are gone. They mostly bought days, weeks or months ago… and are now liquidating.
That doesn’t always apply to a specific ‘rumor’ or expectation (I prefer ‘Buy the Expectation, Sell the Realization’ but it is not as concise and catchy). Instead, it sometimes refers to a general trend – which is a type of expectation in many cases. As a result, a culminating news item (realization) often caps an uptrend – signaling the peak of bullish sentiment.
On a small scale, that was the case last week as Silver rallied into its cycle high and wave-duration target (~June 14) – with the culminating surge coming on the heels of multiple inflationary news items.
Such could be the current case in the Dollar – with a spike high coinciding with multiple events of recent days (including escalating trade war rhetoric, although that could technically be viewed as ‘rumor’).
It has also been the case in Bonds & Notes, bottoming on some of the best economic news in years.
And such could soon be the case in equities as they approach a powerful convergence of daily, weekly & monthly cycles…
Stock Indices continue to forge ahead – rallying from multi-month cycle lows in late-March 2018 into a projected multi-month peak in late-June/early-July.
A peak at any time now would perpetuate the ~5-month low-low-low-low-high-(high) Cycle Progression that timed the late-Jan. high and projects another high in late-Nov./early-Dec. 2018.
They are showing signs of vulnerability with the DJIA remaining the weakest index of late. Since its late-March cycle low, the DJIA was only able to recover .618 of its preceding decline – even though it rebounded for longer than it declined.
It was expected to peak near 25,309 – 25,335 – targets detailed in late-May and reiterated since then. Those upside targets were reinforced by monthly resistance for June and corroborated by the weekly 21 High MAC.
The DJIA set its highest close at 25,322.
The DJIA has continued to see its weekly 21 MAC roll over to the downside but needs a weekly close below ~24,250/DJIA to close below it and give a bearish breakdown signal.
The daily price action has begun to corroborate.
The DJIA turned its daily trend down and then turned its daily 21 MAC down as it was closing below that channel and neutralizing its intra-month uptrend. Today’s high spiked right back up to that newly-descending daily 21 Low MAC and reversed lower.
So, the DJIA is generating multiple (negative) signals on a daily basis as the NQU is extending its advance and attacking the uppermost intermediate targets (7330 – 7359/NQU, where the April – June rally would equal the Feb. – March rally).
All of this sets the stage for a new intermediate decline to take hold in the very near future…
The first sign of an intermediate top would be [reserved for subscribers].”
The DJIA has triggered multiple sell signals after reaching upside targets surrounding ~25,300… reinforcing that an intermediate peak is likely intact. The Nasdaq 100 is nearing its uppermost target (7359/NQU) and is expected to set a peak any day, now that it has entered the June 19 – 29 cycle high. Both of these setups reinforce expectations for July & August 2018!
If a multi-month peak (and reversal lower) is set in the second half of June, it would reinforce more significant cycles surrounding Nov. 2018. See Weekly Re-Lay & INSIIDE Track for additional details and/or related trading strategies.