Stock Market: Early-June High Projected; Subsequent Sell-off into ???.
06/01/22 Weekly Re-Lay Alert – “Stock indices initially surged into May 27 after reaching multi-month downside targets and setting a pair of divergent lows on May 12 & May 20. That created the ideal setup for a new 1 – 2 month bottom after stocks matched previous declines. The May 27 peak was/is expected to spur a brief pullback and then a rally into June 3/6.
Stock Indexes completed the month of May with only the Nasdaq-100 reversing its monthly trend down. That reinforces the likelihood for a divergent peak in Sept/Oct ’22 (with NQ-100 likely setting a lower high as other indexes rally to higher highs) AND the likelihood for a 1 – 2 month bottom in May ’22.
Reinforcing this scenario, stocks closely adhered to the 2-Year Cycle AND the recurring intra-month pattern during the month of May ’22.
The 2-Year Cycle has been repeatedly illustrated and detailed, most recently portending a 1 – 2 month low in Feb ’22, an intermediate peak (led by DJIA) on April 19 – 21, and a subsequent low around May 19 (May 19 ’16 was previous low, May 20 ’22 was recent low).
However, price action was the primary focus – in particular the outlook for the Russell 2000 to complete its ~6-month sell-off and bottom near 1710/QR, where a myriad of range & wave targets converged with decisive support levels.
At 1710/QR, the Russell also completed a 50% retracement of the entire 2020/2021 advance while retesting the level of BOTH the late-2018 and early-2020 peaks – the two most significant tops prior to 2022.
The Russell 2000 dropped right to that target (6 – 12 month, 2 – 3 month & 2 – 4 week range targets) and bottomed while other indexes (DJIA, SP, etc.) were also reaching textbook wave targets.
Stocks also followed their recurring path in May, setting multi-week peaks in the opening days of each month and then seeing 1 – 2 week declines – setting lows around the 19/20th of the month (May 19, June 18, July 19, Aug 19, Sept 20 & Dec 20, ‘21). In May ’22, they repeated that entire pattern.
June ’22 could begin with a similar pattern, partially due to this ~30-degree cycle, partially due to intra-month trend patterns, partially due to weekly cycles (most notably in the NQ-100) and partially due to daily cycles. That would likely create a 1 – 2 week peak on June 3/6.
Looking out a little farther, the S+P 500 is projecting an intermediate rally into late-June/early-July ‘22 – the next phase of a ~3-month/~90-degree low (early-Oct ‘22) – high (early-Jan ‘22) – high (late-Mar ‘22) – (high; late-June/early-July ‘22) Cycle Progression.
This comes after the S+P completed successive declines of near-equal magnitude (700+ points) and duration (7 weeks each) – a textbook ’a-b-c’ correction in which the ’c’ wave mirrors the ’a’ wave decline. The DJIA also completed a similar ’a-b-c’
If a 1 – 2 month peak is set in late-June/early-July, it could help hone the specific time for the projected Sept/Oct ‘22 high (~3-months/~90 degrees later).”
Stock indexes are fulfilling projections for divergent lows on May 12 & 20 and divergent highs on May 27 & June 3/6. Another 1 – 2 week sell-off could follow. On an intermediate basis, the next peak is expected in late-June/early-July ’22 – after an intervening sell-off (following June 3 cycle high).
The Russell 2000 attacked and held its 6 – 12 month & 3 – 6 month downside target at ~1710/QR – a decisive objective that has been discussed since the Russell 2K reached its major, upside (5th wave) objective at 2460/QR in Nov ’21 and signaled a 6 – 12 month (or longer) peak. Now that it has fulfilled that analysis and decisive downside target, the Russell could begin to lead a bottoming process in equities. As always, that will likely include a sequence of divergent lows.
On a broader basis, stocks remain in a major topping process – fulfilling the outlook for a decisive peak in early-Jan ’22 followed by a multi-month plunge to begin 2022. That is just the start of a massive shift projected for 2022 – ultimately leading to market jolts in late-2022 through late-2023. An overall 4 – 5 month decline was/is expected between that Jan ’22 cycle peak and the next (Sept/Oct ’22) cycle peak.
Will Another Sell-off Follow June 3/6 Cycle Peak?
When is Next Intermediate Low Most Likely??
What Does Russell 2K Action Portend for Other Indexes?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.