Stocks Confirming 1 – 2 Month Highs; Project New Rallies in Jan/Feb ‘23.
12/21/22 Weekly Re-Lay Alert – “Stock Indices sold off sharply after the DJIA fulfilled ongoing projections (since late-Sept ’22) for an advance into late-Nov/early-Dec and to 34,200 – 34,600 – a 4th quarter gain of ~20% that fulfills the 12-Year & 24-Year Mid-Term Election Cycles… before a multi-week peak would become likely.
That reinforces focus on a critical convergence of cycles coming into play in the first half of Jan ’23. From the perspective of the NQ-100 – which has remained weak and often led sell-offs in the market – a low next month would fulfill a ~30-week/~7-month low (Mar ’20) – low (Sept ’20) – high (Apr ’21) – high (Nov ’21) – low (Jun ’22) – (low; Jan ’23) Cycle Progression.
That dovetails with analysis described in late-Sept/early-Oct ’22, when most stocks were signaling 2 – 3 month lows and subsequent 1 – 2 month buy signals, that detailed ongoing cycles in the Russell 2000 projecting a future low for Jan ’23. The chart copied above (and the HCP diagrams on page 2) is from the Oct 5, ’22 Weekly Re-Lay Alert and was accompanied by this analysis, which remains intact:
10-05-22 – “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)…
However, all this action is reinforcing a future cycle…
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 a low.
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”
Those cycles were reinforced by the rally into mid-Nov ’22 – the midpoint of the ~15-week cycle. (When a trend is nearing its culmination, the final cycle highs or lows will often be separated by a rally/decline of near equal duration.
The 7 – 8 week rally into mid-Nov ’22 was/is likely to be followed by a 7 – 8 week decline into Jan ’23.) That mid-Nov ’22 high also provided the division and potential for the following:
The Russell 2000 sold off from mid-Aug into late-Sept ’22 and then retested that low in mid-Oct – completing an ~8-week decline. Following that low, the Russell 2000 rallied for 5 weeks (.618 of the 8-week decline)…
On a 2 – 4 week basis, Stock Indexes have been going through a topping phase since the DJIA surged into late-Nov and fulfilled its ~2-month upside price target (even as the DJTA, Russell 2000, and others failed to retest their mid-Nov highs… the first phase of divergence).
Most recently, they sold off and turned their daily trends down (some were already in daily downtrends during the bounce into Dec 13) on the heels of the NQ-100’s weekly trend sell signal of Dec 9 and the subsequent daily 21 MAC sell signals on Dec 13 & 14.
The Dec 14, ’22 Weekly Re-Lay Alert highlighted these signals and their connection to the previously-cited cycle lows in Jan ’23…
Stocks plunged the following days and were expected to set initial lows and begin to rebound on Dec 20/21.”
Stock indexes fulfilled projections for the largest advances in 2022 – led by the Dow, which was forecast to reach 34,200 – 34,600/DJIA in late-Nov/early-Dec ’22, on the heels of its Oct 20/21 buy signal. (See Oct & Nov ’22 INSIIDE Tracks & Weekly Re-Lays for details.) They reached that objective, with most indexes retesting their mid-Aug ’22 highs, ushering in a 1 – 2 month topping phase.
These 4Q ‘22 rallies have generated new 4-Shadow Signals that auger new rallies in 1Q ’23. A myriad of weekly cycles corroborate that, pinpointing the beginning of 2023 as the time for a new 1 – 2 month rally to take hold. Weekly extremes (HLS levels) were recently attacked, projecting 1 – 2 month lows in the ensuing weeks.
What Does 4Q ’22 4-Shadow Signal Portend for 1Q ‘23?
How High Could 1Q ’23 Rally Reach?
How Would That Reinforce March ’23 Cycles?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.