Stock Indexes Fulfilling 4-Shadow Rallies; Should Extend into Dec ’25 Before Potential Top.
09-29-25 – “Outlook 2025/2026 – Foreshadows… and 4-Shadows
The first 100 days of 2025 provided plenty of volatility, uncertainty, and – most importantly – some revealing foreshadows for 2026. From a fundamental perspective, the implementation of – and threat of – escalating tariffs provided a glimpse of what was to follow.
From a technical perspective, many markets (most notably, many key stock indexes) produced textbook 4-Shadow signals on a multi-month basis.
This indicator (see broader description on page 5) is set up when a market has been in an uptrend and generated multiple intervening corrections (sell-offs) along the way.
As that trend matures, it will create a sell-off that is larger – and often longer – than any of the preceding ones in that overall advance. That signal is an ominous warning sign – a ’4-Shadow’.
The reason for the ‘4’ in ‘4-Shadow’ is that it represents the wave ‘4’ correction in an overall 5-wave advance. By exceeding the magnitude of all previous declines (in that overall advance), it is revealing a sign of developing underlying weakness.
However, it often does NOT signal a final high is in place. Instead, it paves the way for one final culminating rally that often peters out soon after it spikes above the preceding high. At that point, the market is prepped for a larger and more sustained decline (the fulfillment of the ‘4-Shadowing’)…
Multi-month indicators pinpointed early-April as the ideal time for a multi-month/intra-year low and primed stocks for a new surge.
That was powerfully corroborated when a majority of stocks & indexes fulfilled their 17-Year Cycle projections while bottoming in early-April ‘25. The following is a sample of how that was described many weeks & months before the fact – including the 4-Shadow related observation that every recovery had been quicker than the one before.
That was detailed as the ‘good news’ – or silver lining – of ongoing analysis for a ~30% plunge in stocks leading into late-March/early-April ’25… All those indexes fulfilled their downside targets and all of them bottomed in early-April ‘25.
5 of the 6 primary indexes monitored by INSIIDE Track maintained positive monthly 21 MAC structures and prevented their monthly trends from turning down – projecting subsequent rallies to new all-time highs.
At the same time, they triggered larger-magnitude 4-Shadow signals – reinforcing the outlook for a quick rally to new highs. Most have initially fulfilled those upside objectives but timing is focused on divergent cycles peaking now and in late-2025/early-2026…
Stock Indices remain in overall uptrends but have fulfilled the primary price objective stemming from their early-April lows and the related monthly trend & monthly 21 MAC buy signals at that time. Those indicators projected a rally back to, and/or above, the late-’24/early-’25 peaks in most of the primary indexes.
By itself, that fulfillment does not signal a top or reversal lower. It merely fulfills an important upside price target and ‘checks off’ a key ‘box’. Other indicators are used to build on that objective and signal when an intermediate sell-off is most likely…
On a related note, the IWM (Russell 2000 ETF) fulfilled an ~8-week low-low-low-(high; Sept 22 – 26, ’25) Cycle Progression while retesting its Nov ’21 & Nov ’24 highs. ~245/IWM is a decisive upside range target that has been in place for several years and that could spur a reactive sell-off.
While this potential ‘triple top’ could be a harbinger of future higher highs (if the old adage holds true that ‘double tops hold, triple tops don’t’), it is also the ideal time for a reactive sell-off since it is a multi-year resistance level…
Looking ahead, the action of the next 3 – 4 weeks should be revealing. If stock indexes fail to turn their weekly trends down, it would likely lead to higher highs…
And that would ‘cast shadows ahead’ to early-2026 – when a myriad of weekly, monthly & multi-year cycles & Cycle Progressions converge.” TRADING INVOLVES SUBSTANTIAL RISK!
Stock Indexes remain in overall uptrends, expected to extend into Dec ’25 – when a consistent ~13-month Cycle Progression next recurs. A more significant peak is expected at that time, dovetailing with the latest phases of the ~2-Year Cycle and a related ~4-Year Cycle Progression.
The Russell 2000 set a triple-top – a pattern that ultimately leads to new highs in the subsequent weeks or months (often after an intervening pullback). The DJTA could reinforce that if it fails to turn its weekly trend down. October 10/13th cycle lows should spur new rallies in many indexes.
The Sept 3, 2025 Weekly Re-Lay Alert reiterated the outlook for the rest of 2025 and expectations for a dangerous period between Dec ’25 and March/April ’26. It stated:
9-03-25 – “…there is the pair of pivotal cycles in the second half of 2025 – both of which were/are likely to time the culmination of significant rallies and usher in critical tops. The first of those was in late-July/early-August…
The second cycle peak arrives in Dec ’25 and has been cited in previous analysis regarding these two time periods. Among other things, it is the next phase of a ~13-month low (Sept ’22) – low (Oct ’23) – high (Nov ’24) – (high; Dec ’25) Cycle Progression.
Perhaps more significant is its connection to the ~2-Year Cycle and the over-arching ~4-Year Cycle.
The ~2-Year Cycle was examined frequently in late-2021/early-2022 – when a 6 – 12-month peak was forecast for Jan 2022. At the time, it was fulfilling a ~2-Year low (Jan/Feb ’14) – low (Jan/Feb ’16) – high (Jan ’18) – high (Jan ’20) – (high; Jan 2022) Cycle Progression and projected to spur a 6 – 9 month drop.
Two phases later is ~January 2026 and closely dovetails with that Dec ’25 (~13-month) cycle peak.
That is also the next phase of the over-arching ~4-Year low (Jan ’14) – high (Jan ’18) – high (Jan ’22) – (high; January 2026) Cycle Progression…It would be a more ‘pure’ cycle peak if new highs were seen at that time…” – End of excerpt from Sept 3, 2025 Weekly Re-Lay Alert
Will Stocks Ultimately Rally into Late-2025?
What Did Early-’25 Plunge ‘4-Shadow’ for 2026?
Why is Dec ’25 – March/April ’26 Vulnerable?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.