NFLX Signaling Multi-Month Peak During Late-June/early-Jly. Cycle Peak.
NFLX Signaling Multi-Month Peak During Late-June/early-Jly. Cycle Peak.
07/14/18 Weekly Re-Lay: Stock Indices remain mixed with the Nasdaq 100 remaining strong and in an all-out uptrend as the S+P 500 nears its secondary highs of mid-March and the DJIA sets progressively lower highs. The key – to the 1 – 2 month outlook – remains the DJIA with respect to its June highs. It would take a daily, and then weekly, close above 25,402/DJIA to violate the 5-month Cycle Progression.
In most cases, the DJIA is the least diverse and least representative of the overall market. With its composition of only 30 stocks, frequently re-aligned to bring in positive stocks and dump negative ones, it can give a rather skewed perspective.
However, the Nasdaq 100 and S+P 500 have become far less diverse, with close to 80% of the NQ-100’s gains coming from three stocks in 2018 (AMZN, NFLX & MSFT). The same stocks account for 70+% of the S+P 500’s gains, according to CNBC and other sources. Add in GOOGL, AAPL & FB and you have almost all of the NQ-100’s gains.
After moving parabolic in 2018, NFLX has shown some signs of vulnerability after completing back-to-back ~150.0 rallies since Dec. 2017. In the past, I have discussed certain stocks acting as a proxy for the overall market. NFLX could be the canary in the coal mine (IF it closes below 380.0).
As for the overall indices, they have rallied since turning their intra-month trends up on July 6, validating the short-term buy signal generated in the NQU on July 5. The NQU has generated a series of bullish signals while the DJIA has done the opposite.”
Stocks are steadily tracing out a topping process in 2018, expected to roll over in 3Q 2018 and then turn decidedly negative in 4Q 2018. NFLX could be the first sign of trouble, having fulfilled major upside objectives and signaling a likely 3 – 6 month (or longer) peak. Look for other ‘proxy stocks’ to follow in the coming month(s).
Focus remains on pivotal cycles in late-Nov./early-Dec. – after which equities should enter their most bearish phase (assuming they see an initial decline before a rebound into a secondary high by early-Dec.). 22,100/DJIA is one of the primary downside targets for 2018 and could be hit before or after the late-Nov./early-Dec. (secondary) peak.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.