‘Ideal Scenarios’ in Stock Market; Late-July Russell 2000 Peak!
07/12/23 – “Frequently, these publications will cite an ‘ideal’ scenario – in one market or another – that could unfold. There are two primary reasons for citing these, and often some secondary reasons, as a market trend or retracement unfolds:
- The first reason is the obvious one – to anticipate where a market might head.
- The second is often the more important one (depending on where a market sits when this ‘ideal’ scenario is discussed) – to test the accountability and validity of future analysis…
An ‘ideal’ scenario is simply (no more and no less) the perceived scenario that would fulfill the majority of applicable indicators or cycles – or both – at a given point in time. It does not imply that it is ‘ideal’ for a specific market participant (bull or bear; trend follower or congestion trader, etc.) or ‘ideal’ for another related market complex… or anything else.
It merely implies that scenario fulfills the greatest amount of indicators and – in most cases – reflects the most ‘normal’ market action (as opposed to extreme moves or objectives).
It usually reflects when a market would most closely follow the ‘textbook’ application of key cycles and/or indicators – often reflecting balance or an attainment of equilibrium, sometimes symmetry, in a given trend of a given market.
Another one of those ideal scenarios has been paving the way for subsequent ideal scenarios – in Gold, Silver and the XAU (and HUI) Index…
For almost two months, the Weekly Re-Lay described how the ideal scenario for Gold & Silver was to see a rally into – and multi-month peak during – early-May… ideally on May 3 – 5, ’23.
The corresponding cycles were often detailed and related price objectives also came into focus (2080 – 2100/GC & ~26.50/SI) and were published.
Both Gold & Silver reached those price targets in the first half of April and then consolidated for a few weeks. They needed to allow ample time to pass before the bullish cycles – that were ushered in along with the early-March buy signals in Gold – would reach their apex.
Sure enough, on May 4 Gold & Silver attacked their highs and set their highest daily closes of the entire ~2-month rally… but did not close above their April highs despite spiking above them. With Silver spiking to a slightly higher high during the May 5 trading session, both Gold & Silver reversed lower and fulfilled their oft-cited ‘ideal’ scenario of peaking on May 3 – 5, ’23.
In that case, both factors were almost equally important. The upside target provided the ‘ideal’ time for the intermediate uptrends to peak and the early-March buy signals to reach fruition. It also reinforced ongoing analysis for metals to set multi-month highs at one of their two most important cycle peaks in 2023 (see INSIIDE Track for discussion on the other future cycle).
That peak was preceded by a peak in the XAU & HUI Indexes – almost exactly 1 year (360 degrees) from their April ’22 peaks – in mid-April ’23. Since that time, the XAU has been adhering to its own ‘ideal’ scenario for the period from mid-April – mid-Aug ’23 – when the next multi-month low is most likely.
In the interim, both indexes set multi-week lows in late-June/early-July and were forecast to undergo rebounds to ~130 – 133/XAU & 254 – 257/HUI in the near term.
That was expected to coincide with the ‘ideal’ scenario for precious metals – a quick, sharp rally in Gold & Silver from July 10 – 14 that should see Gold surge to 1984 – 2000/GCQ & Silver to 24.60 – 24.80/SIU.
Following a July ’23 (secondary) peak, metals and the related indexes are expected to – in the ‘ideal’ scenario – decline into mid-Aug ’23. A low in the XAU at that time would fulfill an uncanny ~23-week high-high-high-low-low-(low) Cycle Progression and overlapping 45 – 51 week low-low-low-(low) Cycle Progression.
More specifically, that 23-week Cycle Progression recurs on Aug 11 – 18, ’23. Corroborating that, a .618 retracement in time (28-week rally followed by 17-week decline) would reach fruition on Aug 7 – 14, ’23 [199-day rally & 123-day decline pinpoints Aug 14, ’23]. That is also the latest phase of a ~12-month high (Aug ’19) – high (Aug ’20) – low (Sept ’21) – low (Sept ’22) – (low; Aug/Sept ’23) Cycle Progression in the XAU.
Ideally, the XAU & HUI would ultimately drop back to (or below) their early-March lows – which now represent 4th wave of lesser degree support near 110.0/XAU & 210/HUI. Depending on the levels of impending (expected) highs, those downside targets could shift lower.
To reiterate, this scenario – particularly the cyclic aspect of it (XAU low on Aug 7 – 18, ’23) – is when the greatest synergy of cycles, timing objectives, and Cycle Progressions converge… creating the ‘ideal’ time for a multi-month low. More specific targets – in price and time – should emerge in the coming weeks.
As for other markets…
Stock Indices remain positive with the DJIA fulfilling its ‘ideal’ scenario – spiking lower on July 10 and then entering a new rally, expected to last into July 14. It re-entered neutral territory, on a daily chart basis, and retested its recent high… and the high set in late-Nov/ early-Dec ’22. It would not show new strength until a weekly close above that level.
Last year, the DJIA provided an uncanny ‘ideal’ scenario while triggering a 1 – 2 month buy signal on Oct 20/21, ’22. It was projected to repeat a Mid-Term Election Cycle AND fulfill a myriad of contemporary cycles & indicators – forecast to surge up to ~34,600/DJIA during 4Q ’22.
It fulfilled that scenario while surging into late-Nov/early-Dec ’22 and setting its highest daily close at 34,589/DJIA. It is currently retesting that high but has never (yet) closed above it. For over 7 months, the DJIA has traded in the range it set during Nov ’22.
That congestion could remain intact and ultimately spur a sell-off into [reserved for subscribers]…
Meanwhile, the Russell 2000 is fulfilling its near-term outlook (and ‘ideal’ scenario) – a rally up to ~2,000+/RT where its declining monthly 21 High MAC is poised to intersect the Feb ’23 & Aug ’22 highs… AND the latest two weekly LHRs.
It was/is showing it could stretch the next intermediate high into July 24 – 28 ’23, the fulfillment of a ~6-week low-low-high-(high) Cycle Progression, successive 18-week advances, and a 25-week high-high-(high) Cycle Progression. In the interim, it is likely to set a short-term peak on July 14/17.”
Stock indexes remain in bullish but divergent 3 – 6 month cycles & trends and recently signaled multi-week highs but have not elevated the magnitudes of those peaks. As it did in Nov ’21, the Russell 2000 is beginning to show signs of an impending multi-month peak but still needs to rally back to ~2,000/RT and into late-July ’23 – where/when a decisive peak is most likely.
Is The Russell 2000 the ‘Canary in the Coal Mine’… or Just an Outlier?
What is Significance of Monthly 21 & 40 High MACs?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.