Stocks “Casting Shadows Ahead’: Indexes Likely to Drop to New Lows… and Extend Sell-off into late-May.  What are Weekly Trends Revealing?

Stocks “Casting Shadows Ahead’: Indexes Likely to Drop to New Lows… and Extend Sell-off into late-May.  What are Weekly Trends Revealing?

05/22/19 Weekly Re-Lay Alert: Casting Shadows Before – Stock Indices rebounded after dropping into May 10 and attacking their monthly HLS levels (extreme downside targets for May 2019) and their March 2019 lows (i.e. 25,208/DJIA) – the lowest levels of the past 12 – 13 weeks. Those lows – and the double bottoms that now exist near them – could be casting shadows ahead.

For starters, they are reinforced as decisive support levels (~25,200/DJIA, ~2,800/ESM & ~7,300/NQM).  If/ when those levels are broken, stock indices would likely see a quick drop that doubles the current range (taking them down to ~23,700/DJIA, ~2,640/ESM & ~6,700/NQM).  Those March/May lows would then become resistance and a potential 50% rebound target…

Equities are now in a decisive 1 – 2 week period when the weekly trends possess their first opportunity to turn down and confirm a multi-month peak.  The DJIA, S+P 500 and others generated a second neutral signal against their prevailing weekly uptrends on May 17 (it would take weekly closes below 25,222/DJIA & 2799/ESM to reverse those trends down).

The NQM triggered its first neutral signal, so it could not turn its weekly trend down until May 31, at the very earliest (trigger point yet to be established).  Those weekly trend patterns are the key to the outlook for the coming months.

Most indexes rebounded from their May 13 lows to test (and remain below) their now-descending daily 21 Low MACs, while maintaining their daily & intra-month downtrends.  So, they remain in near-term downtrends with the short-term bias to the downside.

On a near-term basis, the DJIA has reinforced an intermediate ‘shadow cast before’ – continuing to vacillate around a pivotal range at ~25,950 – 26,050.

The DJIA’s rapid ascent – of late-Dec. through late-Feb. ground to a halt when successive weekly closes were set at 26,031 & 26,026/DJIA.  In between, the monthly close occurred at 25,913/DJIA.

It meandered through March ’19, retesting that resistance multiple times while setting the early-month, mid-month & late-month high closes at 26,026, 25,962 & 25,928/DJIA.  The March monthly close was 25,928.

After closing above that resistance on April 1, the DJIA spent that month trading above that range – dipping back to test it while bottoming at 26,062/DJIA on April 11.  It then rallied to ~26,700, doubling its March ’19 trading range and setting up ~25,970 as a 50% retracement level to the downside.

It dropped back to that support, set successive daily closes at 25,965 & 25,967/DJIA and then doubled that range (April – early-May), plunging back to 25,200 support.  And that established ~25,970/DJIA as a 50% rebound level – half of the late-April/early-May drop.

Since breaking below, and closing below, that range on May 7, the DJIA has bumped back up against it multiple times but never closed above it.

Now, as stock indexes enter the daily cycles when another reversal lower is most likely… the DJIA is reinforcing that resistance zone with its descending daily 21 Low MAC, daily LHR, daily trend neutral point and weekly 2nd Close Resistance.

Until a daily close above 26,050/DJIA, the 1 – 2 week and 2 – 4 week trends are down and could spur a new round of selling into late-May.  If that occurs, it would elevate this type of sequence and potentially establish ~25,200/DJIA as a multi-month swing point, just as ~26,000 has been a multi-week swing point of late.”


May 20 action reinforced late-April/early-May sell signals and is likely to trigger a new wave down.  The Nasdaq 100 is increasing the likelihood a new decline will last into (at least) May 31, in order to turn the weekly trend down and confirm a multi-month peak.  All the indexes are confirming the dangerous period forecast for May – Aug. 2019.  What could be seen in June 2019??

Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.