Stock Market Topping; Early-Jan. Should Trigger New Sell-off After Divergent Peaks.
12/15/21 Weekly Re-Lay Alert – “Stock Indices have, for the most part, moved higher after bottoming in line with daily & weekly cycle lows in early-Dec, most synergistic on Dec 3/6. Weekly trend signals corroborated that outlook and helped pinpoint recent lows in various indexes, while projecting subsequent rallies into early-Jan ‘22.
The action of the past several weeks corroborates the intermediate cycle outlook for sharp sell-offs into early-Dec, described in late-Oct and late-Nov (Nov ’21 & Dec ’21 INSIIDE Tracks)… while reinforcing the 3 – 6 month outlook for subsequent peaks in early-Sept, early-Nov and then early-Jan ’22.
The S+P 500 and Nasdaq-100 reinforced that timing with their weekly trend patterns and price action. The NQ-100 dropped right to its initial downside target and ‘c = a’ objective on Dec 3, while retracing 50% of the Oct 4 – Nov 22 rally (15,565/NQH). That set the stage for a new rally – ideally stretching into Jan ’22.
Much like the Russell 2000 (and its range parameters at 2085 & 2460 – with a mid-point equilibrium point near 2272), the NQ-100 is trading in well-defined ranges – most recently trading from a mid-July low near 14,400 up to an early-Sept high of ~15,600 and back down to ~14,400 in early-Oct.
It then rallied into late-Oct, back to 15,600 and above – surging to ~16,800/NQH in the weeks that followed (doubling the ~1,200/NQH range that had confined it between 14,400 and 15,600 for ~four months).
After testing 16,800, the Nasdaq 100 quickly dropped back to ~15,600/NQH – the level of the Aug/Sept ’21 high and the ceiling of the previous range (resistance turned into support) – retracing 50% of its Oct/Nov rally while pulling back right to the level of its rising weekly 21 High MAC…a very synergistic level of support for an intermediate bottom…
On a near-term basis, daily trend indicators portended a short-term peak on ~Dec 13 followed by a reactive 1 – 3 day pullback. That has now taken place and set the stage for a second advance that could roughly equate to the first advance from Dec 1 – 3 into Dec 13.
In many indexes (DJIA included) the inversely-correlated daily 21 MARC will plunge over the next two weeks – ushering in a much better chance for the corresponding daily 21 MAC to turn back up and help support price action.
In order to confirm the onset of a new 1 – 2 week rally, several indexes still need to turn their daily trends up – with daily closes above 4705.0/ESH & 16,439/NQH as well as 2827/IDX & 2278/QRH – to confirm that an intermediate low is in place and to project a rally back to or above the recent highs.
The overall equity market is still expected to set a more significant peak in 1Q ’22, most likely in Jan/Feb ’22…
There is an important distinction, with respect to impending cycles, that should be kept in mind:
Daily and some weekly cycles peak in early-Jan ’22 while monthly and quarterly cycles peak in 1Q ’22 (more synergistic in Jan/Feb ’22). These diverse cycles could combine and time a single peak.
They could also, just as easily, time a pair of separate peaks – an initial one in early-Jan ’22 and a subsequent one possibly in Feb ’22. Price action will be the key.”
Stocks fulfilled projections for sharp sell-offs in Nov/Dec ’21 and are poised for a bounce into early-Jan ’22 before a new sell-off. The NQ-100 reached multi-month upside targets surrounding 16,700/NQ and signaled a wave ‘5’ peak.
In early-Nov, the Russell 2000 fulfilled its monthly & weekly trend patterns as well as Elliott Wave structure – all of which projected a final surge following the Sept 20 cycle low. It reached pivotal upside targets near 2460/QR, projecting a subsequent (larger-magnitude) sell-off toward 2085/QR and ultimately lower.
The DJTA was similar – reaching multiple major upside price targets in early-Nov and setting the stage for a multi-month (or longer) peak. Continued divergence is expected as the equity markets prepare for what could be a dramatic shift in 2022, beginning with a decisive and divergent peak in early-Jan ‘22.
What are ramifications of DJTA, Russell 2000 and NQ-100 attacking multi-month or multi-year upside targets in Nov ‘21? What does this mean for sell-off after early-Jan ’22 cycle high??
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.