Stock Indexes Complete ‘Largest Rally of 2022’; Long Positions Exited in Mid-Aug.
08/27/22 Weekly Re-Lay – “Stock indices have sold off after precisely fulfilling analysis for a ~4-week rally into, and then a multi-week high on, Aug 15/16. That peak was set as the DJIA reached its final upside target for the mid-July buy signals and as the DJIA, S+P 500, NQ-100, Russell 2000 and S+P Midcap 400 attacked and held their monthly resistance levels (at mid-month). Futures traders could have exited all long positions in e-mini SP futures w/avg. overall gains of ~$21,000/contract. (Futures trading involves substantial risk. Past performance is no guarantee of future results.)…
Stock Indices have sold off after surging from July 14 into Aug 16, fulfilling the 1 – 4 week and 1 – 2 month buy signals triggered on the July 14 sell-off. That peak perpetuated a ~1-month low-low-low-low-(high) Cycle Progression. They also fulfilled the mid-June outlook for ‘the largest rally of 2022’.
From a price perspective, stock indices fulfilled the majority of upside price potential with the DJIA peaking right at its final upside target (profit-taking level for the July 14 buy signal) at 34,200 while most indices fulfilled their intra-month uptrends by peaking at monthly resistance/SPRs (34,228/DJIA, 4309/ESU, 13,787/NQU, 2014/QRU & 2640/IDX).
Corroborating that, the DJTA had a 20-week high-high-(high) Cycle Progression emerging on Aug 15 – 19, when it completed successive advances of 33 days each. In that case, the Transports could have been setting a multi-month peak.
The S+P Midcap 400 peaked within days of a ~21-week low-high-low-high-high-high-(high) Cycle Sequence while fulfilling an over-arching 41 – 43-week low-low-low-high-(high) Cycle Progression. They did that after rebounding a full .618 of their Nov ’21 – June ’22 decline… but without turning their weekly trend up.
Weekly trend action in other indexes reinforced that – projecting a likely peak on Aug 15 – 19. However, the ramifications of those weekly trend patterns are noteworthy. At the time, the DJIA & S+P 500 were only able to neutralize their weekly downtrends twice… and quickly reversed lower. That is often a signal at the end of a 1 – 2 month advance, when a prevailing downtrend resumes.
With all of these indexes now completing Intra-month Inverted V Reversals lower, that is also a negative factor on an intra- and inter-month basis – reinforcing overall congestion…
1 – 4 week & 1 – 2 month traders (futures and cash) could have been long from July 14 into mid-Aug – exiting on Aug 15 – 22 with e-mini S+P futures traders averaging a gain of about $21,000/contract.”
Futures trading involves substantial risk. Past performance is no guarantee of future results.
Stock indexes completed the July 14 buy signals – fulfilling projected 3 – 4 week advances into Aug 15/16 and up to primary upside objectives while completing what was forecast to be ‘the largest rally of 2022’. If a subsequent high is set on Sept 12 – 16, it would usher in a bearish phase for stocks in the second half of September ’22. Volatile consolidation is likely until mid-Sept.
The DJIA reached its multi-month upside target (~34,200), signaling a likely multi-month peak, as the DJTA & S+P Midcap 400 fulfilled decisive cycle highs that should create multi-month peaks. Most indexes failed to turn their weekly trends up, signaling multi-month tops and projecting declines back to their mid-June lows in the ensuing month(s).
On a broader basis, stocks powerfully fulfilled projections for a decisive peak in early-Jan ’22 followed by a multi-month plunge in the first half of 2022. They then fulfilled projections for the largest rally of 2022, triggering 2 – 4 week buy signals on July 14 and fulfilling those signals on Aug 16. Consolidation is expected until Sept 12 – 16 ’22, when cycles again turn negative.
How Does Mid-Aug ’22 Cycle Peak Fit with Overall 2022/2023 Outlook?
Why Does DJIA, DJTA, Russell 2000 & S+P Midcap 400 Action Portend New Decline??
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.