Stock Cycles Aligning in late-Jan./early-Feb; Early-Dec. Cycle Lows Corroborate.
12/18/19 Weekly Re-Lay Alert: “Stock Indices remain in intermediate uptrends after experiencing sharp pullbacks in the opening days of December – testing and holding 2 – 4 week support while generating bullish daily trend signals. That came at the same time that longer-term cycles were projecting a multi-month bottom in the Chinese equity indexes – giving some clues regarding trade talks.
Those early-Dec. sell-offs perpetuated a ~2-month (60-degree) cycle during which sharp declines took hold in early-June, early-Aug. & early-Oct. – each time unfolding during the first 2 – 3 trading days of the new month but never turning their intra-month trends down.
In early-Dec., stock indexes repeated the pattern (cycle) and twice neutralized their daily uptrends while selling off into Dec. 3. That completed a type of drop-drop-drop-drop Cycle Progression (creating a corresponding ~2-month low-low-low-low Cycle Progression) – in which similar declines were seen at that precise interval…
Throughout much of 2018 – 2019, the equity markets have traded in remarkable similarity to their 2-Year & 4-Year Cycles. In Sept./Oct. 2018, the 2-Year Cycle was described in great detail with the following observations:
9-26-18 – “One of the most consistent cycles in equity markets is an approximate 2-Year Cycle (accounting for similar consistency in a corresponding 4-Year Cycle and even 8-Year Cycle).
This 2-Year Cycle has multiple facets, including the timing of related moves at a ~24-month interval. This is more likely when the market has been in a similar trend for several years.
In many instances, those similar moves will be on progressively higher or lower degrees (magnitudes) due to the progression of higher and lower magnitude waves.
A perfect example involved the following sequence on a 2-year interval:
– A moderate sell-off that bottomed on Feb. 3 – 12, 2014 (~1250/DJIA points or about a 7.5% decline).
– A sell-off of one larger degree that bottomed on Feb. 3 – 12, 2016 (~2500/DJIA points or about a 14% decline)
– A sell-off of one larger degree that bottomed on Feb. 3 – 12, 2018 (~3250/DJIA points or about a 12% decline).
Previously, the DJIA also had a decline of 900 points or 8.3% that bottomed on Feb. 3 – 12, 2010.”
…While these broad cycles provide some intriguing parallels and a general (potential) roadmap, price action needs to continue to dictate expectations on a short and intermediate basis.
The primary indexes remain in solid uptrends even as the Transports continue to show signs of rolling over to the downside. In most previous cases, it is when (if) the Transports enter a second decline (a ‘c’ or ‘3’ wave to the downside) – and break below the lows of the initial decline – that the other indexes stand up and take notice.
This is a perfect parallel to the Axiom of Market Correlations (see Tech Tip Reference Library) in which a reliable and consistent correlation is not usually seen until the lead market – in this case, the DJTA – enters an extreme phase or breaks decisive support…
Until then, the primary indexes remain in convincing uptrends until daily closes below 28,016/DJIA, 3159.5/ ESH & 8531/NQH.
The action of the next 10 – 12 days should reveal whether a unique fractal of uncanny cycles – including the latest phases of the 2-month cycle, the 2-Year Cycle and the 4-Year Cycle that all focus on early-Feb. 2020 – will set the stage for the rest of 2020.”
Stock indexes possess an uncanny convergence of weekly, monthly & multi-year cycles focused on late-Jan./early-Feb. ’20 – when an uncanny 2-Year Cycle will join the 40-Year Cycle (as well as the 8-Month & 16-Month Cycles). There are some intriguing possibilities for the weeks that precede that convergence… and the weeks that follow it.
What Would late-Jan./early-Feb. Sell-off Reveal About 2020?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.