Equity Markets At 2017 Midpoint (June/July)
06/28/17 INSIIDE Track:
Outlook 2017-2018
Decennial Danger Period
06-28-17 – Picking up on last month’s discussion on midpoints, we have now arrived at the precise midpoint of 2017 – a pivotal time when reversals are more likely. In most cases, the extremes will not occur exactly on June 30 or July 1 – which is why I monitor the broader period of June/July for these transitions.
On a slightly more specific basis, many of those reversals take hold between mid-June and mid-July of a given year… with the same caveat as any indicator within technical analysis:
It is only when the synergy of multiple coinciding indicators appears that these conclusions can be given credibility.
So, a trader should not rely solely on this pattern or this cycle, but should use it as a starting point. And, this pattern is more reliable when a market has been trending in one direction for the first half of the year. If it set its low in January and has steadily rallied into June, there is a better chance for a mid-year peak. The opposite is true for a market that set its intra-year high in January and trended downward into June.
A prime example of this – that is corroborated by monthly, weekly & daily cycles (synergy) and most recently by its weekly HLS (showing it has fallen to an extreme downside target and is poised for a multi-month reversal higher in late-June/early-July) – is occurring in Soybeans. [See July 2017 INSIIDE Track for full details]…
40-Year Cycle (Shift) Midpoint
As detailed last issue, the midpoint of 2013–2021 – the period linked to the 40-Year Cycle when seismic shifts are anticipated in many arenas – is mid-2017. That is also the time when Food Crisis Cycles have been forecast to take hold and trigger the largest moves in many commodities – just as was seen in 1977–1980.
2017 is also when the Dollar was expected to reverse lower, a factor that could (as it did in 1977–1980) have an inflationary impact on these commodities.
As Soybeans move through this transition period – from mid-June–mid-July, when a reversal higher should be unfolding – they are already giving additional signs of an impending bottom. More detailed analysis can be found on page 8.
Decennial Cycle Declines
Shifting gears, there is another recurring cycle that is also tied to this mid-year period and the likelihood for significant reversals. It is the Decennial Cycle that was addressed in December and that is portending a dangerous period in 3Q & 4Q 2017.
The table on page 2 (see Dec. 2016 INSIIDE Track) details some of the most significant declines (sometimes the entire sell-off) in the Decennial Cycle – that have occurred in July–Oct. or July–Nov. of the ‘7’ year. Even the more recent sell-offs – in 2011 & 2015 – overlapped this intra-year cycle. Will July–Nov. ‘17 repeat? IT
1857 – Panic of 1857: Rail stocks peaked in July 1857; July–Sept. 1857 decline culminated with Sept. 1857 ‘Panic’. Overall decline lasted into Spring 1858.
1907/1908 – Panic of 1907 (Oct.) AKA – Banker’s Panic (50% drop in NYSE); July–Oct. 1907 – DJIA drops from 80+ down to ~52 – a drop of ~35% in 3 months.
1917 – Stock crash – 40% drop from late-Nov. 1916 into Dec. 1917 . Roughly 36% of that decline occurred in June–Dec. 1917 – when the DJIA dropped from ~110 to ~70.
1937/1938 – Second stock market crash (49%) following abrupt Fed tightening; Industrial production plummeted 30%, unemployment rose 30% (from 14+ to 19%), manufacturing dropped almost 40%,
1947/1948 – UK economic (& fuel) crisis/Sterling Crisis
1957/1958 – Global Economic Crisis (Eisenhower Recession)
1967/1968 – UK/Sterling Crisis & devaluation… beginning of gold drain that led to 1971 Nixon Shock in US.
1977/78 – Jan. 1977–March 1978 – ~26% decline in DJIA.
1987/1988 – Aug. — Oct. 1987 ‘crash’ (~40% drop in DJIA).
1997/1998 – Asian Financial Crisis & Russian Ruble Crisis; July 1997 ushers in Asian Financial Crisis & triggers July.–Oct. 1997 sell-off in stocks; Crisis continues & is joined by Ruble Crisis in 1998 – triggering another July–Oct. sell-off.
2007/2008 – American/European Financial Crisis (Iceland, UK). Many Indices experienced July 2007 peaks and initial sell-offs into Aug. 2007, followed by a retest of highs in Oct. 2007. In this case, the majority of the decline came during the ‘8’ year – in June–Nov. 2008.
2017/2018 – The period of July–November has included almost everyone of these Decennial declines. Some started earlier & some lasted longer. However, the overwhelming majority of these periods experienced a large chunk of the sell-offs in that July–Nov. time frame.
Even in this overall advance – since 2009 – the two sizeable corrections were in July–Oct. 2011 & July–Sept. 2015 (even though both of those were preceded by peaks in May).”
Stock Indices in midst of crucial mid-2017 period (June/July 2017) when intra-year uptrend is most likely to peak. Decennial Cycle argues for July–Nov. 2017 decline, repeating an uncanny 10-year pattern. Watch for signs of peak once upside price targets are attacked (at 21,616–22,030/DJIA & 2465–2531/SPX).
Three decisive longer-term cycles should be in negative phases by the end of July 2017 – including the 40-Year Cycle (negative in 3Q/4Q 2017), 17-Year Cycle (downturn in March 2017–Oct. 2019) & 10-Year Decennial Cycle (likely sell-off in July–Nov. 2017, potentially stretching into March 2018). See Weekly Re-Lay & INSIIDE Track for additional details.