Stock Indexes Signaling Multi-Week Peaks; Long Positions Exited.
08/24/22 Weekly Re-Lay Alert – “Stock Indices have corrected 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/~30-day cycle that had timed multi-week lows on the 12 – 16th of the month (March 14/15, April 12, May 12, June 16 & July 14) and was expected to invert and time a subsequent high.
As a result, it fulfilled a ~1-month low-low-low-low-(high) Cycle Progression and projects a subsequent peak on Sept 15/16 that would fulfill a ~1-month low-low-low-low-high-(high) Cycle Progression.
From a price perspective, stocks fulfilled the majority of upside price potential for these buy signals with the DJIA peaking right at its final upside target (and profit-taking level for the July 14 buy signal) at 34,200…
Corroborating that, the DJTA had a 20-week high-high-(high) Cycle Progression emerging on Aug 15 – 19, when it would complete successive advances of 5 weeks each (successive 33-day rallies projected that peak for Aug 16). It peaked on Aug 16…
The S+P 500 & NQ-100 turned their daily trends down while the DJIA would not do the same until a daily close below 32,858/DJIA. (The Russell 2000 turned its daily trend down last week while the S+P Midcap 400 would not do the same until a daily close below 2517/IDX.)
More than anything, those daily trend reversals (and/or lack thereof) reinforce that the Aug 16 highs ushered in a multi-week phase of consolidation. The initial part of that is the current decline…
The next 1 – 2 days and the next 3 – 5 days should both be revealing as stocks head into the latest weekly close and then monthly close. For now, the outlook remains that they should set a pair of highs in mid-Aug and then mid-Sept ’22 with a correction in between.
1 – 4 week & 1 – 2 month traders (futures and cash) could have been long for ~4 weeks after entering long positions in stock indexes during the July 14 sell-off as the indexes retested their early-July lows.
1/2 of these should have been exited at 33,400/DJIA, 4260/ESU & 1970/QRU and the other 1/2 when the DJIA hit 34,200/DJIA and/or the other indexes closed below their Aug 11 lows. In the case of the e-mini S+P futures trade, traders could have exited with an overall 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 – and triggered a new phase of consolidation. 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. The DJIA reached its multi-month upside target (~34,200), signaling a multi-month peak, as the DJTA & S+P Midcap 400 fulfilled decisive cycles that should create multi-month highs. Most indexes failed to turn their weekly trends up, projecting declines back to their mid-June lows in the coming weeks/months.
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. An overall 4 – 5 month decline was/is expected to follow… ideally bottoming on June 13 – 21! That is when stocks bottomed and produced a 1 – 3 month bottom and their first (upside) reversal signal. July 14 produced the second signal – triggering long positions that precisely fulfilled upside targets in price and time – culminating on Aug 15/16. 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.