Stocks Consolidating Below Highs; Portend Rally into Late-July ‘23.

07/08/23 – “Stock indexes are consolidating near their highs with the S+P 500 and NQ-100 remaining strong while the DJIA provides signs of slowly rolling over to the downside.  Short-term peaks are expected around July 14 & July 28, with sell-offs in between…

Similar to the S+P Midcap 400, the DJIA has been tracing out a slow, rolling 6 – 12 month (secondary) topping process.  After generating a monthly close below its rising monthly 21 Low MAC in June ’22, the DJIA rebounded to attack its 21 High MAC in Aug ’22 (rising), Nov/Dec ’22 (flattening) and now in June/July ’23 (declining) while maintaining a monthly ‘Dn/Neut (2+)’ trend since Nov ’22.

In contrast, the Russell 2000 has been mired in the bottom ~third of its ~2.5-year trading range (the lows of which were set right where the Russell 2K peaked in 2018 & early-2020) but has continued to hold its June ’22 low.  It could rally up to ~2,000+/RT – where its declining monthly 21 High MAC is poised to intersect the Feb ’23 & Aug ’22 highs – before a final peak is set at or below the 2023 high.

That is also where the latest two weekly LHRs converge.  In June, the Russell tested & held its monthly LHR (~1932/QRU), presaging a likely peak in July.  Recent action has been mildly constructive and could stretch the next intermediate high into July 24 – 28 ’23, the fulfillment of a ~6-week low-low-high-(high) Cycle Progression, successive 18-week advances, and a 25-week high-high-(high) Cycle Progression.

Stock Indices are extending divergence with the S+P 500 spiking to a slight new high as others bounced to lower peaks.  The DJIA is turning negative and would provide the ‘ideal’ scenario if it set a low on July 10 or 11…”


Stock indexes remain in bullish but divergent 3 – 6 month cycles & trends and recently signaled multi-week highs but have not elevated the magnitudes of those peaks.  As it did in Nov ’21, the Russell 2000 is beginning to show signs of an impending multi-month peak but still needs to rally back to ~2,000/RT and into late-July ’23 – where/when a decisive peak is most likely.

 

Is The Russell 2000 the ‘Canary in the Coal Mine’… or Just an Outlier?

What is Significance of Monthly 21 & 40 High MACs?

 

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