Stock Market Danger; 4-Shadow Signal Portends Larger Decline!
01/19/22 Weekly Re-Lay Alert – “Stock Indices are perpetuating an intra-month pattern that has been seen in the majority of months since May ’21. In those instances, the indexes peaked in the opening days of the month and then moved progressively lower… In the current case, they are selling off after the DJTA – the index that has led most of these corrections (both 2 – 4 week and 2 – 4 month corrections) – set an initial high on the second trading day of the month.
That is the same day (in the respective months) that created a very precise ~2-month/~60-day high-high-high-(high) Cycle Progression – previously timing highs on the second trading day of the month in July, Sept. & Nov. ’21. (That could lead to a subsequent, secondary high in the opening days of Feb ’22 as well.)…
That dovetails with the action in the DJIA, which spiked to new highs on Jan 5 – coming within 2 days of when an intermediate peak was most likely – and sold off, ultimately reversing its daily uptrend down, in the process. (The NQH had already peaked in late-Dec., in sync with its own daily cycles.)
Not only did those highs fulfill short-term cycles and this ongoing intra-month/inter-month cycle, they also fulfilled the outlook for overall advances into early-Jan ’22 – linked to previous highs in early-Sept & early-Nov as well as an ~8-month cycle that last timed a more significant peak (in weaker indexes) in early-May ’21.
That was forecast to trigger an initial sell-off in Jan ’22.
Corroborating those cycles, indexes like the Russell 2000, NQH, S+P Midcap 400, etc. fulfilled decisive price objectives to time another multi-week peak (after reaching multi-month upside targets in Nov ’21 and signaling that those peaks should continue to hold).
Their Nov/Dec ’21 declines had been large enough to trigger 4-Shadow Signals and project a more significant decline after a bounce into early-Jan. ’22.
The Russell 2K & Nasdaq-100 attacked critical resistance (2280/QRH & ~16,700/NQH) and reversed lower – signaling slightly larger-magnitude corrections. The Russell 2000 just broke below its primary downside target (and key range-trading target) – from that peak – at 2085/QRH as the Nasdaq-100 broke below pivotal range support near 15,600/NQH.
~1895/QRH & ~14,400/NQH are the next range-trading targets to the downside (though that indicator does not distinguish timing… and needs corroboration).
One intriguing related fact: If the NQ-100 drops below ~14,950/NQH, it will have created the largest correction since March ’20. That would represent a 4-Shadow Signal on the next higher magnitude… and could be warning of a larger correction after the next rally.
In the short-term, these indexes were projected to sell off into Jan 10 and then bounce into Jan 12/13 – when daily cycles projected a secondary top. Jan 12/13 was the latest phase of the 11 – 12 trading day high-high-high-high Cycle Progression that helped time the late-Dec. peak in the NQ-100.
That was also in sync with the daily trend patterns in several indexes like the DJIA. It turned its daily trend down during the initial sell-off into Jan 10 – confirming a multi-week peak while ushering in a 2 – 3 day reactive bounce that usually follows that signal.
During the ensuing bounce into Jan 12/13, it could not neutralize the new daily downtrend – portending a new sell-off. That has since unfolded.
The next phase of that 11 – 12 trading-day cycle comes into play on Jan 31 – Feb 2, the same time that weekly cycles converge in several indexes. It is likely to time the next intermediate top with most indexes on track to produce lower highs at that time. A more vulnerable period unfolds after that.
On a weekly basis, the DJIA has generated one neutral signal against its weekly uptrend. The S+P 500 has generated two neutral signals. It now requires a weekly close below 4572/ESH to turn the weekly trend down – a lagging/confirming indicator.
Perhaps more significant is the action in the NQ-100. That index has neutralized its weekly uptrend multiple times but would not turn that trend down until a weekly close below 15,545/NQH. It has dropped well below it this week, but the Jan 21 close is the deciding factor for the weekly trend.”
Stocks are adhering to the outlook for a decisive peak in early-Jan ’22 followed by a new multi-month decline to follow. That was expected to usher in the more dynamic (and often more devastating) ‘C’ wave declines in Jan/Feb ’22 with an intervening (lower) high expected in early-Feb. “A more vulnerable period unfolds after that.”… at the same time Gold has been forecast to see an accelerated advance into Feb 21 – 25 – hinting at more trouble on the horizon.
This action is initially corroborating the outlook for a dramatic shift in 2022 and could trigger an overall correction into March ‘22. The NQ-100, Russell 2000 & DJTA reached multi-month upside targets in Nov ’21 and signaled a wave ‘5’ peak on various levels – signaling that those highs could hold for many months (or longer) and trigger the largest declines since March ‘20.
How Does This Impact 10, 20 & 40-Year Cycles Colliding in 2022?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.