Stock Market Sell-off Phase II; Brief Bounce into early-Feb. Before Larger (?) Decline.
01/29/22 Weekly Re-Lay – “Stock indices have fulfilled the 2-Year Cycle (as well as corroborating 2-month, 4-month & 8-month cycles) that projected a January sell-off after cycles peaked in early-Jan ’22. They dropped sharply since entering a dangerous period when more dynamic ‘c’ wave declines (a form of ‘3’ wave) were set to unfold. That came after a myriad of stocks and indexes signaled 3 – 6 month (or longer) peaks in Nov ’21 – reaching multi-year upside price targets, range targets and wave objectives – and then triggered 4-Shadow Signals with their Nov/Dec ’21 sell-offs, portending higher-magnitude declines in Jan ‘22…
Stock Indices are showing some signs of an intermediate low after powerfully fulfilling what the 2-month, 4-month, 8-month & 2-Year Cycles have been projecting since early-May, early-Sept & early-Nov ’21 – when successive highs were set and forecast a more significant peak and reversal lower in early-Jan ’22.
The Nov/Dec ’21 sell-off corroborated that by triggering 4-Shadow Signals in most indexes – projecting a larger-magnitude decline in Jan ’22 after an intervening bounce into early-Jan ’22. In many indexes, that was expected to be the more dynamic and destructive ‘c’ wave decline after they had signaled 3 – 6 month (or longer) peaks in Nov ’21 and then experienced ‘a’ wave declines (Nov/ Dec ’21) and ‘b’ wave rebounds into late-Dec ’21.
The S+P 500 and Nasdaq 100 indexes reversed their weekly trends to down, portending a likely bottom on Jan 24 – 28 that was in sync with the DJIA weekly trend. [The DJIA twice neutralized its weekly uptrend and reversed higher this week, without turning its weekly trend down.]
That is a lagging/confirming indicator that often times (within a week or so) an initial low and the onset of a reactive 1 – 3 week bounce. It also signals that a higher magnitude decline is unfolding and another sell-off should follow that reactive rebound.
All of this is also in the context of the uncanny 2-Year Cycle that has been discussed since mid-2021 and which has spurred January sell-offs (a majority being 10 – 15% declines) in 5 of the past 6 phases. In 2010, 2014, 2016, 2018, 2020 & now 2022, stocks have experienced January sell-offs with many of them (2022 included) exceeding 10% in magnitude.
Many indexes have paralleled action in 2015/2016, including 2Q ‘15/’21 highs, Aug ‘15/’21 lows, rebounds into late-Dec. ‘15/’21 and subsequent sharp sell-offs in Jan ‘16/’22.
Most indexes have now created the largest declines since Feb/Mar ’20 – a 4-Shadow Signal on the next higher magnitude that could be warning of a larger correction after the next rally.
Stocks spiked to new lows and reversed higher this past week, adhering to the normal weekly trend pattern and fulfilling daily cycle lows in the NQ-100 (bottoming on Jan 25 – 27). This action also validates the potential for secondary highs to be set in the early days of Feb ‘22. As long as stocks continue their recent rebounds, they could spike higher and set early-Feb. ’22 peaks. Daily & intra-month trends will likely help clarify this.”
Stocks are adhering to the outlook for a decisive peak in early-Jan ’22 followed by a new multi-month plunge to follow. That has been expected to trigger the more dynamic (and usually 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.”… and was just reinforced by a higher-magnitude 4-Shadow Signal that portends another sharp plunge after a bounce into early-Feb.
That is set to unfold at the same time Gold has been forecast to see an accelerated advance into Feb 21 – 25 – hinting at more trouble on the horizon during the month of Feb ‘22.
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.