Stock Market Perfect Storm
1/02/15 INSIIDE Track: “Stock Indices have fulfilled multi-year expectations and projections for an overall advance into 4Q 2014. The stock market rally into 4Q 2014 completes a 40-year inflationary advance in Stock Indices originating from the 4Q 1974 bottom. Will that advance ’turn on a dime’? That remains to be seen.
In the case of the Nasdaq 100 (the Index that had the greatest synergy of cycles converging in Nov. 2014 – linked to previous highs & lows in Nov. 2007, Nov. 2008, Nov. 2012 & Nov. 2013) AND the NYSE, Nov. 2014 remains the highest peak in those Indices. That is a powerful validation to the overall outlook – that should trigger a new decline in the new year…
Leading into – and through – 4Q 2014, Stock Indices provided the Perfect Storm of converging ‘systems’ foreboding a 2015 decline…
1 – The first ‘system’ was a timing system – the combination of all those monthly & yearly cycles – ranging from 3, 6 & 7-Year Cycles up to 12 & 40-Year Cycles – projecting a culminating surge into 4Q 2014.
2 – The second ‘system’ was a price system – the combination of all those multi-month, multi-quarter & multi-year projections for an ultimate surge to ~18,150–18,550/DJIA. (See Aug. 2014 INSIIDE Track & July 2014 Weekly Re-Lays for details).
3 – The third ‘system’ was another timing system – the combination of various weekly cycles, with the most noteworthy being an 8–9 week (~60-degree or 2-month) cycle that has governed action in the NYSE for the last couple years. It came into play – and produced tops – in late-June/early-July and early-Sept. 2014 and was expected to produce another peak in Nov. 2014 (and then in early-Jan. 2015).
[At the same time, an overlapping ~9-week cycle began governing intervening lows – another sign that a transition is taking place in a market. It timed the Oct. low and then, 9 weeks later, the low of mid-Dec.]
4 – Along with these ‘systems’, a growing sequence of divergent highs was corroborating the cycles in late-2014, focusing on the greatest synergy of cycles in November 2014.
As 2014 unfolded, the Indices did advance into late-2014 (fulfilling #1), the DJIA spiked up to 18,103 (almost perfectly fulfilling #2), the Indices did set multi-week highs in November (fulfilling #3) and the divergence between highs is increasing with each passing cycle (fulfilling #4).
If the Indices begin January with a new sell-off, it would further validate all of these ‘systems’ AND fulfill the next phase of the 8–9 week cycle that projects a peak and reversal lower on Dec. 29–Jan. 9th.
5 – The latest ‘system’ – though actually one that has been playing out throughout 2014 – is an uncanny parallel to the decline of 1973–1974, an important part of the 40-Year Cycle (since it ushered in the 40-Year Cycle of Stock-flation).
…Could a January 2015 reversal lower trigger a similar, analogous move down?…Let’s go back to the 40-Year Cycle & add another phase into the equation…
From the Great Depression DJIA low of 1932, Stock Indices rallied for 40 years into 1972 (with an intervening, 35+% decline 5–6 years earlier). That rally reversed lower in January 1973 and led to a 50% drop unfolding over the ensuing 2-year period.
From the Stock-flation DJIA low of 1974, Stock Indices rallied for 40 years into 2014 (with an intervening, 35–50% decline 5–6 years earlier). Could that rally reverse lower in January 2015 before a 50% drop unfolds over the ensuing 2-year period?
As discussed previously, one of the key cycles to monitor – as confirmation of (or lack thereof) a developing bear market – comes into play in the second half of April 2015.” [See January 2015 INSIIDE Track for more details on why a quick drop into January 15th or 16th would powerfully corroborate expectations for April 2015… and what that means for the first half of 2015.]