NQ-100 & AI Stocks Signal Top; Project Sell-off into ~April 19th (Date of Aggression).
03/27/24 – “Two are better than one, because they have a good return for their labor… Though one may be overpowered, two can defend themselves. A cord of three strands is not quickly broken”
Ecclesiastes 4:9 & 12 – NIV
Synergy
These publications will often discuss the potential for a cycle ‘reinforcement’, usually involving an additional turning point at the midpoint of a primary cycle or Cycle Progression. Let’s briefly unpack that for a minute…
The ‘cycle’ in question describes the consistent interval of time between significant highs or lows. In some cases, that will be what is recognized as a ‘geometric’ cycle of 30, 60 or 90 days (degrees)… when successive highs (or lows) are set 1, 2, or 3 months apart. (‘Geometric’ cycles are primary divisions of a circle, treating a year as a full 360-degree revolution.)
This recurring interval (cycle) between successive highs does not have to be ‘geometric’, but this discussion will stay on that theme…
If a market has set 3 successive highs with a ~2-month span between each one (i.e. highs on June 14th, August 14th & October 14th… + or – 1 trading day), that cycle – and a textbook Cycle Progression sequence – would anticipate another high on/around December 14th… 2 months after the October 14th high.
Interim Corroboration
Once that conclusion has been reached, reinforcing factors could add synergy to that outlook and, at least in theory, increase the probability of its occurrence. Some of those reinforcements could take the form of price action – the ultimate determining factor or filter – and include price/time indicators that pinpoint a specific period of time after a certain price pattern unfolds.
Others could include corroborating cycles – those that are not related to the 30/60/90-degree pattern but which reach a similar conclusion (projecting a future high around December 14th).
Finally, there are ‘reinforcing’ cycles – when the prevailing cycle breaks down into proportional or symmetrical factors. A 60-day cycle could break down into two 30-day or even three 20-day cycles that reinforce the overall conclusion. (If an intervening high is set on November 14th, there would now also be a ~30-day high-high-(high) Cycle Progression portending a future high on/around December 14th.)
That intervening (November 14th) high would be considered a ‘reinforcing’ and/or ‘midpoint’ cycle. And that brings us to a specific application of that principle…
Stock Indices have fulfilled 1 – 2 year upside price targets in recent weeks, indicating their advances (since late-2022) are living on borrowed time. The attainment of upside objectives does not immediately signal a top or trigger a reversal lower but does show a market has completed all that was projected/expected for this move. Strong trends are notorious for extending beyond these types of targets, but usually not for long.
As discussed in recent weeks, individual stocks are showing wide divergence with a few key stocks (like NVDA and other AI-related stocks) carrying the recent advances. However, there is growing disparity even in the ‘Magnificent 7’ stocks – reinforcing this divergence.
3 of those 7 stocks set their highest weekly closes in Dec ’23 or Jan ’24.
In the case of NVDA – another stock viewed as a ‘proxy’ for potential turning points in the market – it created a pair of range trading targets after bottoming near 110 in October 2022 and then setting a secondary low near 390 in October 2023. That range (~280) projected future range-trading parameters at 670 and again at 950 – a major upside objective.
NVDA surged above 670 and then pulled back to it – setting a higher low at 662 (intraday) – 674 (low daily close) on February 21st. That retest of a breakout level – resistance turned into support – projected a new surge to ~950, which was recently fulfilled.
That February 21st low (662/674) also created a corresponding Intermediate LLH at ~950… which was ultimately tested as NVDA attacked its extreme upside target for 2024 (yearly LHR).
That stock has vacillated since reaching its upside targets but would not turn negative – on an intermediate basis – until a daily close below 840. It was projected to set a subsequent high on March 25th… which was just fulfilled as NVDA set its highest daily close at 950.02!
At the same time, the NQ-100 has traded sideways after surging into late-February ’24 – the fulfillment of an ongoing ~2-month/~60-degree cycle (similar to the hypothetical cycle used in the example on page 1) and setting its highest daily close on March 1st – one day after that ~2-month cycle peak.
It needs a daily close below 18,200/NQM to turn neutral and a daily close below 18,006/NQM to turn its 2 – 4 week trend negative. (Until those occur, the trends remain up.) A drop below ~18,070/NQM would also turn the direction of the daily 21 MAC down.
At the same time, the Russell 2000 and S+P Midcap 400 are playing catch-up and are the indexes alluded to in the opening discussion… A high in the first half of April 2024 would also fulfill a ~14.5-month high-high-high-(high) Cycle Progression in the S+P Midcap 400 – connecting peaks in Sept ’20, Nov ’21, Feb ’23 and April 2024.
That index is the last to fulfill its 1 – 2 year upside price targets, currently attacking those objectives:
3-06-24 – “If it is able to spike up to 3003 – 3034/IDX, the S+P Midcap would complete a rally from its October ’23 low that is 1.618 times the magnitude of the preceding decline… and reach the intermediate LLH created by its October ’23 and January ’24 lows… 2980 – 3045/IDX is also where monthly resistance and the Intra-Month PLLR for March 2024 exist.”
1 – 3 month & 3 – 6 month traders should be lightening up on long positions in anticipation of a sizeable correction. The remaining upside potential appears very limited as the downside risk escalates.” TRADING INVOLVES SUBSTANTIAL RISK!
Stock Indexes have attacked multi-year upside targets as they enter the first month of Natural Year 2024/25 – a time when a significant shift is expected in many markets. That first ‘month’ – from March 20/21st into April 19/20th – often times revealing shifts that influence the remainder of that Natural Year. In 2024, that period is projected to time an initial sell-off in equity markets.
That also aligns with focus on the Date of Aggression – April 19th… the culmination of this transition period. The key will be what occurs during that (projected) decline, particularly with respect to weekly trend indicators and weekly 21 MACs. This should be a ‘telling’ time for equity markets and the outlook for the months to follow… with April 19th likely timing a critical inflection point.
AI stocks are reinforcing this. NVDA just attacked its multi-month upside target near 950… and could see a sharp correction into April 19th… and potentially beyond (if one key indicator turns negative by/on April 19th).
What Would Trigger a Stock Market Sell-off into ~April 19th?
How Does This Align with 17-Year Cycle of Stock Declines?
Could This Ultimately Lead into the 2025/26 Recession Cycle?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.