Stocks Bounce to Resistance; Multi-Month Bottom Likely Forming.
10/05/22 Weekly Re-Lay Alert: The September 26 – 30, 22 Shift Validated – “Stock indices plunged into Sept 30, fulfilling another bearish phase that took hold after the mid-Aug ’22 highs and entered its culminating phase coinciding with subsequent highs projected for Sept 12 – 16. That spurred a sharp sell-off into the latest phase of a few key cycles that bottomed in late-Sept ’22.
The primary one was a 14 – 15-week high-low-low-(low; Sept 21 – 30) Cycle Progression – one of the two most consistent NQ-100 & DJIA weekly cycles over the past ~15 years – that portended a 1 – 2 month bottom by/on Sept 30.
Overlapping, and corroborating, that was an offset 15 – 16-week high (Nov 8 – 12, ’21) – low (Feb 21 – 25, ’22) – low (Jun 13 – 17, ’22) – low (Sept 26 – 30, ’22) Cycle Progression – most obvious in the Russell 2000.
The latest decline had the S+P 500 attacking 3 – 6 month support at 3560 – 3610/SPX while the NQ-100 re-tested a myriad of downside targets and 3 – 6 month support levels at 10,700 – 11,100/NQ (2022 HLS, multi-year range-trading support, 50% retracement of Dec ’18 – Nov ’21 advance, test of the Sept/Oct ’20 lows).
Those price targets reinforced the timing for a low.
Equally important was the action of the weekly trends. The rally into mid-Aug ’22 fulfilled multiple cycles and 2 – 3 month upside objectives without turning the weekly trends up. That projected a drop back to the June ’22 lows in stock indexes.
The Sept 30 low arrived 1 – 2 days after most indexes fulfilled their mid-Aug weekly trend sell signals. Similar to other weekly trend signals, that fulfillment often triggers a sharp, reactive 1 – 3 week rally…
Stock indexes have rallied toward their monthly resistance levels in the first three trading days of the new month, twice neutralizing their daily downtrends in the process. As a result, the positive trigger point is the same for both trends…
It would take daily closes above 30,455/DJIA, 3820/ ESZ & 11,711/NQZ to turn the daily AND intra-month trends up. (The Russell 2000, the topic of this discussion, already turned its daily trend up after bottoming on Sept 28… leading this reversal higher. It needs a daily close above 1782.5/QRZ to turn its intra-month trend up and corroborate that reversal higher.)…
Looking out beyond 4Q ’22, there is a future cycle that is most prominent in the Russell 2000 and which could provide some clues as to what to expect in Oct & Nov ’22. It comes into play during the first two weeks of Jan ’23 and is considered more likely to be [reserved for subscribers].
That is the next phase of the ~20-week high (Jun 21 – 25, ’21) – high (Nov 8 – 12, ’21; major top) – high (Mar 28 – Apr 1, ’22) – high (Aug 15 – 19, ’22) Cycle Progression – similar to the one cited in the DJTA when the mid-Aug ’22 peak was taking hold – AND the next phase of the ~15-week high-low-low-(low) Cycle Progression that just timed the Sept 26 – 30, ‘22 low.
The midpoints of these cycles could help hone expectations for Jan ’23…”
Stock indexes sold off into the recurrence of an uncanny ~15-Week Cycle that projects a 1 – 2 month bottom by/on Sept 30, reinforced by several indexes dropping to new 2022 lows. More importantly, they have fulfilled 9 – 12 month downside wave structures and project a higher-magnitude rally in the coming month(s). A bottoming phase should now begin to unfold… and could lead to a 15 – 20% DJIA gain in 4Q ’22.
On a broader basis, stocks are reinforcing longer-term analysis for a 1 – 2 year peak in early-Jan ’22 followed by a 6 – 12 month plunge in 2022. See related publications for additional analysis.
How Would Late-Sept ’22 Low Reinforce Overall 2022/2023 Outlook?
Why is Higher-Magnitude Rally Expected in 4Q ‘22??
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.