Stocks on Cusp of Larger Sell-offs; 2-Year Cycle Reinforcing Weakness.
02/21/20 INSIIDE Track Stock Index Update: “Stock Indexes are validating the potential for another sell-off after mid-Feb. They continue to validate the 2-Year Cycle – first fulfilling the potential for a late-Jan. sell-off, then fulfilling expectations for an early-Feb. low and reversal higher, and most recently producing a subsequent 2 – 3 week rally before a new sell-off.
The daily trends are now the key and should reveal whether a larger sell-off is imminent. Before elaborating on that, it is helpful to review what has transpired in 2020 – compared to what unfolded in the opening months of 2018 (and previous occurrences of the 2-Year Cycle)…
In 2018, the lead indexes & stocks peaked on Jan. 16/17 and then plunged in late-Jan. – bottoming and reversing higher in the Feb. 3 – 8 time frame.
In 2020, the lead indexes & stocks peaked on Jan. 16/17 and then plunged in late-Jan. – bottoming and reversing higher in the Feb. 3 – 8 time frame.
In 2018, the lagging indexes & stocks condensed their decline to a 2-week/14-day drop in late-Jan. – bottoming and reversing higher in the Feb. 3 – 8 time frame.
In 2020, the lagging indexes & stocks condensed their decline to a 2-week/14-day drop in late-Jan. – bottoming and reversing higher in the Feb. 3 – 8 time frame.
In 2018, stock indices then rallied for 18 – 20 days and subsequently suffered sharp, 3 – 5 day sell-offs.
In 2020, stock indices then rallied for 18 – 20 days and subsequently suffered sharp, 3-day sell-offs. An additional 1 – 2 days of selling would perpetuate the parallel.
The evolving divergence is one thing that (slightly) distinguishes the two periods. That is led by weaker indexes, like the DJTA and Russell 2000, turning down in late-Jan. and remaining in a corrective phase ever since.
The Transports are still likely/expected to remain below the mid-Jan. peaks (than in Jan.) – reinforcing the 11 – 12 week cycle that helped pinpoint the Jan. 17 – 24 peaks in many stocks.
The stronger indexes – DJIA, S+P 500, NQ-100 – reached a new set of highs in the second half of Feb. – perpetuating the 2-Year Cycle while creating divergence among the indexes.
Most indexes sold off last week, ushering in a pivotal 1 – 2 day period for Feb. 24/25. Daily trend patterns, daily 21 MACs and 21 MARCs, intra-month trend patterns and short-term cycles reinforce that potential with the likelihood for [reserved for subscribers]…
Stock indexes are giving mixed (though turning negative) signs on a near-term basis with the S+P 500 and Nasdaq 100 neutralizing their daily uptrends twice after triggering outside-day reversals mid-week – projecting a sharp multi-day sell-off.
It would take daily closes below 3328.0/ESH & 9411/NQH to turn the daily trends down and confirm 1 – 2 week peaks in those indexes. This sets up Monday as a decisive day for these reversals. Feb. 24/25 is also the latest phase of multiple low-low-low daily Cycle Progressions in diverse indexes.”
Stocks poised for sharp sell-off in line with 2-Year Cycle & over-arching 40-Year Cycles – poised to fulfill ominous 4-Shadow Signal triggered in late-Jan. That warned that a much larger drop is on the horizon as DJTA weekly cycles and sell signals project a second plunge into weekly cycle lows.
What Do Latest Sell Signals Portend for Feb. 26 – 28 Cycle in Transports?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.