Interest Rates Bottoming as Stocks Project Surge into May ‘21.
Outlook 2020/2021: The Decade Bubble Effect…
04-29-20 – For the past decade, the period of 2020/2021 has been forecast to see the culmination of many dramatic events, bubbles, and transitions – much of it linked to the 40-Year Cycle and the overall period of 2013 – 2021.
The final years of that period (2018 – 2021) are when two decisive unifications were/are forecast – one in the Middle East and one (a re-unification) in Europe. When discussing both of these, the repeated conclusion was that it would take another economic and/or political meltdown to usher in these new unifications.
With many nations in Europe coming to a near standstill due to Covid-19, and oil plunging into negative territory, it is becoming a little clearer what could push both those regions to the edge of an economic (and potentially a political) abyss.
Throughout 2019, INSIIDE Track repeatedly explained why late-2019 should usher in escalating turmoil in the Middle East – exactly 40 years from when the Iranian/US Embassy hostage taking debacle ushered in a ~14-month quagmire beginning in Nov. 1979. Related analysis in oil continued to project a drop to new lows – below the Dec. ’18 low. It all came together in late-2019 through early-2020.
Synergy
In this case, there was a more intense synergy of exacerbating factors also focused on late-2019/early-2020 as the time when global struggles would escalate exponentially. One of those was a natural phenomenon (it is always the synergy of many cycles or events that gives them their significance)…
Solar Cycle 24 was heading into its low point with Solar Cycle 25 expected to bottom in late-2019 – a transition that historically times dramatic global challenges, most recently in 2008/09 and 1997/98).
Along with that, there was a combination of economic and geopolitical cycles that were also forecast to emerge in late-2019 – mid-2020. That was most definitively described in Feb. ’19 – portending what were labeled as ‘Stock Panic Cycles’ and ‘The Cycle of Global-Shaping Events’ to emerge at the transition of the decade (end of 2019, start of 2020).
As described over a year ago, this cycle times a recurring series of stock market panics, crashes and crises (’crises… stock malaise… larger global collapse’) over the past 160 years and was primed to rear its ugly head in early-2020 – as soon as the most convincing monthly cycle of the past 5 – 10 years had peaked (~16-month cycle in Jan. ‘20).
2-27-19 – “Perhaps the best-known solar cycle is the one that governs the ebb and flow of sunspots or solar storms. It is an ~11-Year Cycle (averages out to 11.2 years) that has an uncanny knack for also linking monetary and military events of cause and effect…
…the last two phases began with the events of 1997 – 1998 (11 years after the stock market crash of 1987) when the economic world was rocked by a pair of crises – the Asian Financial Crisis and the Russian Ruble Crisis… a worldwide stock malaise took hold in 2000 – 2002.
…it was 11 years after the events of 1997 – 1998, in 2008 – 2009, when a larger global collapse ensued… This cycle comes back into play in 2019 – 2020…”…
Stocks have rallied sharply after precisely fulfilling the 1Q ’20 expectations linked to the 2-Year Cycle AND the 40-Year Cycle – as well as multiple indicators and some uncanny weekly cycles in the DJTA – all of which forecast a sharp sell-off during the second half of Feb. ‘20 and lasting into March 23 – 27.
Reinforcing that, the Transports fulfilled corroborating monthly cycles that forecast a multi-month drop after the fulfilment of 8-Month & 16-Month Cycles peaking in late-Jan. ’20.
Fortifying that outlook, the Transports fulfilled an uncanny 11 – 12 week high-high-high-high-low-low-low-low-high-(high) Cycle Progression that projected a multi-month peak and subsequent 7 – 8 week decline following a Jan. 17 – 24, ’20 cycle peak.
If those 2-Year & 40-Year Cycles were to remain as prescient and reliable as they have been throughout 2018 – 2020, a powerful rally needed to follow the March 23, 2020 cycle bottom.
Looking out over the next 6 – 12 months, the Transports are giving the clearest signs – from a cycle and wave perspective. However, it needs to be kept in mind that the various indexes diverge from one another so a future (2021) lower peak in the DJTA could easily coincide with a higher peak in the DJIA, S+P 500 and/or Nasdaq 100.
It is CRITICAL to assess only what is being analyzed. That is why correlations, when used on their own, can be so dangerous. If you are analyzing the Transports, that analysis pertains to the Transports. If you are analyzing gold stocks, that analysis pertains to gold stocks. The same with tech stocks, oil stocks, and each of the diverse indexes.
Indices like the Transports tend to give very important (and accurate) early warning signs for other stocks or indices… but that is where the correlation should end. At that point, each other market needs to be analyzed ON ITS OWN! With that point again stressed, here are a few revealing aspects of the DJTA action.
— First, the Transports have followed specific monthly and weekly cycles with uncanny accuracy. The one that was shouting warnings for a Jan. ‘20 peak – that would likely hold for 6 months or more – was the 16-Month Cycle (and related 8-Month Cycle). As illustrated in the accompanying diagram, that 16-Month Cycle peaked in Jan. ‘20…
The projected peak in Jan. ‘20 would perpetuate a 16-month low (Jun ’13) – low (Oct. ’14) – low (Jan. ‘16) – low (May ’17) – high (Sept. ’18) – high (Jan. 2020) Cycle Progression. That was powerfully and convincingly fulfilled with the DJTA peak on Jan. 17/20, 2020.
The reason for revisiting this now is to turn focus to the next phase of that cycle – in May 2021. (Interestingly, that is a time that has been discussed in reference to Gold and Gold stocks/XAU – when a final peak is more likely.)
That is when the next comparable peak (to Jan. ‘20) is expected in the DJTA. A peak in May ‘21 would also fulfill an over-arching 32-month low (Jun ’13) – low (Jan. ‘16) – high (Sept. ’18) – high (May ‘21) Cycle Progression. A corroborating peak was expected at the midpoint – in Jan. ’20…
— Second, the DJTA is fulfilling Major, 1 – 2 year downside targets – particularly with respect to its 5 – 10 year wave structure. Since late-2018, the Jan. ‘16 low (~6,400/DJTA) has been discussed as the downside target for this index. That is the 4th wave of lesser degree, from an Elliott Wave perspective.
Another way of putting that is the low before the culminating rally (which is/was the wave ‘5’ rally; see diagram on page 4). When a market competes a 5-wave advance and signals that a top is intact, the previous low becomes the primary downside target for the ensuing ‘A-B-C’ correction. It is also the most pivotal level of multi-year support.
A market that reaches and holds that level is poised to head back toward the highs. In contrast, a market that decisively breaks below that support is showing that a larger-magnitude decline is evolving (impacting what is expected from a subsequent rally once a bottom is set).
For now, the Transports dropped right to that level. The DJTA could still retest that support in the coming months (if other indicators project that) but it has initially fulfilled a decisive downside target. Here again, that should be kept in context and not assumed to imply more than it does.
As for the other indexes, they have rallied sharply since fulfilling a myriad of cycles and signals that projected a sharp plunge from mid-Feb. into March 23 (the 2-year & 40-year anniversary of related lows in late-March 2018 & 1980). That Perfect Storm of stock sell signals was detailed in a series of Weekly Re-Lay publications in early-Feb.
The 2-Year Cycle and 40-Year Cycles remain incredibly pertinent – as they have been the past two years – after projecting declines into March 23 – 27, the precise time that the DJIA bottomed in 2018 and 1980 (2 years & 40 years earlier)…
On Feb. 12/13, 1980, the DJIA peaked and then dropped 20 – 30%, to new multi-year lows, into March 23 – 27, ‘80.
On Feb. 12/13, 2020, the DJIA peaked and then dropped 20 – 30%, to new multi-year lows, into March 23 – 27, ‘20 – fulfilling the 40-Year Cycle…
Bonds & Notes are powerfully confirming the 6 – 12 month outlook – for a 6 – 8 month uptrend from cycle lows in Nov. ‘19 into cycle highs in mid-2020 – and the multi-year outlook that has also been projecting a major peak in June/July ‘20.
These cycles raised the warning signs after signaling a 4th wave low in Dec. ‘19 and projecting a wave ‘5’ advance into mid-2020 – the fulfillment of a textbook, 4-year low-low-low-low-high-high-(high) Cycle Progression.
The mid-2020 cycle peak could be providing another important timing clue for the economic outlook – identifying when sentiment should bottom out and begin to shift to a more positive outlook.”
Bonds & Notes remain focused on July ’20 for a major, multi-year peak (and corresponding bottom in interest rates). They fulfilled analysis for a multi-month low in Nov 2019, and have entered what is perceived to be a final, wave 5 of V advance into a multi-year peak in July ’20.
Longer-term cycles were projecting a ‘Global-Shaping Event’ (with focus on China) and Stock Market Panic in early-2020 (see March 2019 INSIIDE Track for details)… likely spurring this final drop in interest rates. In sync with numerous cycles, that sharp stock sell-off was projected to bottom on March 23 – 27 and begin a new 12 – 18 month advance.
2020/2021 represent final, culminating years of 40-Year & 80-Year Cycles (see Nov ’19 INSIIDE Track) – timing everything from War (watch late-2021 into late-2025), Climate (Drought Cycles peak in 2021/22 and transition to Deluge Cycles in 2022/23), Agriculture, Currency Wars… and ultimately Interest Rates. The first few months of 2020 have powerfully validated that ongoing analysis!
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.