Stock Market Alert: Rally into Jan. 20 – 24 Cycle High Nearly Complete; Late-Jan. Sell-off Projected!
01/16/20 INSIIDE Track Stock Index Update: “Stock Indexes have rallied sharply and are in the process of fulfilling expectations for January 2020. If that occurs, it would be very similar to how 2018 began – the previous phase of the 2-Year Cycle that has been uncanny throughout the past decade.
In that case (and prior instances), it led to a sharp sell-off into early-Feb. That is corroborated by the 11 – 12 week cycle that has governed action in the DJ Transports since the Jan. ’18 peak (see Jan. ’20 INSIIDE Track).
The next cycle in that sequence should be a high and comes into play on Jan. 20 – 24 (Jan. 27 – 31, at the latest).
Reinforcing those timing indicators, stock indexes have been expected to rally to monthly resistance levels before a top would begin to become possible. That was corroborated by multiple weekly LHRs that converge with those monthly resistance levels at 29,211 – 29,255/DJIA, 3304 – 3340/ESH & 9080 – 9156/NQH.
And those were reinforced by primary wave objectives – particularly in the DJIA…
For the current advance (5th wave) to equal the Aug./Sept. rally (1st wave/advance) it would have to reach 29,292/DJIA… which is where it is now attacking.
Equity markets have all entered these upside target ranges as they enter a 2 – 4 week period when a myriad of competing cycles (some timing highs; others timing lows) converge – in late-Jan./early-Feb. – ushering in the potential for a quick, sharp sell-off…
This is in sync with the 2-Year Cycle but would ALSO be another reinforcement to the 40-Year Cycle. This action would possess another similarity to the action of 1979/1980 – the previous phase of the 40-Year Cycle.
2018 – 2019 has closely (sometimes, amazingly closely) followed the roadmap of 1978- 1979 as recapped in the following 7/31/19 analysis.
It summarized what had taken place up to that point and reiterated expectations for a quick drop into late-Aug. ’19 when a 3 – 6 month (or longer) bottom was likely (while also describing why Nov. ’19 should usher in a serious intensification of tensions between the U.S. and Iran… similar to Nov. 1979):
7-31-19 – “Stock indexes continue to trace out a pattern similar to what they did in 1978/1979. (Other parallels include similarities to US/Iran relations in 1979 and the latest phases of China’s unique 40-Year Cycle.)
On an overall basis, the period of 2018 – 2022 was forecast to experience at least four corrections of 10 – 20% during this period – just as in 1978 – ‘82 – with powerful rallies surrounding those declines.
On a little more precise basis, 2018 traded in very similar action to 1978 – exactly 40 years prior.
In 1978, the DJIA set a 6 – 9 month bottom in February and then rallied into Sept./Oct. ‘78. In early-Oct., equity markets reversed lower and dropped sharply (15 – 20%) into/through Dec. ‘78.
Similarly, 2018 saw a 6 – 9 month bottom set in Feb. followed by a rally into Sept./Oct. ’18 In early-Oct., equity markets reversed lower and dropped sharply (15 – 20%) into/through Dec. ‘18.
In 1979, the DJIA rallied – in three distinct waves – throughout the first quarter, peaking in April ’79 and then selling off for a month.
In 2019, the action was similar (not exact, but similar… history rhymes, it does not repeat).
Following that ~month-long sell-off (1979), the DJIA rallied to new intra-year highs into 3Q ’79 – ultimately retesting the 1 – 2 year peak it set in Sept./Oct. 1978.
In 2019, the DJIA is acting similarly – rallying to new intra-year highs into 3Q ‘19 (after a one-month sell-off) and retesting the peak it set in Sept./Oct. ‘18 as key indicators begin to flash warning signs.
In 1979, the retest of the previous year’s peak resulted in a new 1 – 2 month sell-off that was similar – but not quite as damaging – as the 4Q 1978 decline.
In 2019, expectations are similar – based on a host of other indicators and cycles. Stocks are retesting their previous year’s high (the Sept./Oct. ‘18 peaks) and are expected to see a new 1 – 2 month sell-off – with current cycles and related timing indicators portending a low in Aug./Sept. 2019.
It is important to re-emphasize that this is NOT solely an expectation that the market will repeat what it did 40 years ago. That is rarely the case. However, this ~2-year period – in 2018 – 2019 – possessed so many other similarities and so many corroborating cycles and indicators – that the parallels could not be ignored.”
Sure enough, equities did see that sharp sell-off in July/Aug. ’19 and bottomed in late-Aug. ’19. They did set a 3 – 6 month bottom and tensions did dramatically escalate – between Iran and the U.S. – beginning in Nov. 2019.
In 1979 (40 years prior), stocks then rallied into early-1980 – spiking to their highest levels in over two years while setting a multi-month peak in the first six weeks of the new year. The DJIA then suffered its sharpest drop in a couple years – a drop that was complete before the end of 1Q 1980.
In 2019, stocks then rallied into early-2020 – rallying to their highest levels in over two years and could set a multi-month peak in the opening weeks of the new year.
Could the DJIA then suffer its sharpest drop in 6 – 12 months and complete it before the end of 1Q 2020?
That possibility is reinforced by several other cycles and indicators…
The 8-Month & 16-Month Cycles project multi-month peaks for late-Jan. 2020.
The 2-Year Cycle projects a late-Jan. ’20 peak followed by a sharp sell-off into Feb. 2 – 13, 2020.
The 11 – 12 Week Cycle, most prominent in the Transports, projects a multi-week peak for Jan. 20 – 31, ’20.
And now, just as the indexes are about to enter this cycle peak – they are fulfilling a myriad of upside targets.
So, the time is right to begin [reserved for subscribers].”
Stock indexes nearing pivotal time when late-Jan. sell-off is expected. Equities remain on track for rally into Jan. 20 – 24, ‘20 – the convergence of weekly, monthly & multi-year cycles including an uncanny 2-Year Cycleand the 40-Year Cycle (as well as the 8-Month & 16-Month Cycles) – followed by sharp sell-off in late-Jan./early-Feb. The early-Jan. ’20 lows corroborated that scenario and project rallies to 29,211 – 29,292/DJIA & 3307 – 3340/ESH – targets that are now being attacked.
What would a late-Jan. sell-off mean for April 2020 (next cycle peak)?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.