Stocks Drop From Resistance; Fulfill ‘Dangerous Day’ Analysis.
10/07/22 INSIIDE Track Update – “Stock indices are fulfilling their daily trend patterns and daily 21 MACs, two indicators (along with the intra-month trends) that failed to turn positive during the early-month rallies to monthly resistance… in the first 3 – 4 trading days of the new month.
Some of these indexes, including the DJIA, spiked up to their weekly LHR levels – the extreme upside targets for this past week – and quickly reversed lower.
In addition, indexes like the Russell 2000 & S+P Midcap 400 had just turned their daily trends up – a signal that usually times an initial high (Oct 5/6) and prompts a 1 – 3 day reactive sell-off. All those factors were colliding, leading into the Oct 6 close of trading. That led to the identification of Oct 7 as a dangerous day for stocks (and some related markets).
That prompted the following Oct 6 warning:
“The fact that stock indexes have rallied to their descending daily 21 Low MACs and failed to (yet) turn their daily trends up pinpoints tomorrow as a dangerous day. If the employment numbers (and related factors) are not positive for stocks, it could send them back down for a retest of their recent lows… so caution is advised!”
The employment numbers were not favorable and stocks dropped back toward their lows. Based on daily trend patterns, several indexes could spike to new lows while others (Russell 2000, DJTA, S+P Midcap 400) should set secondary/higher lows and then enter new rallies… stocks are still weak and congesting near their late-Sept lows. As long as they do not close below their Oct 3 lows (28,855/DJIA, 3571/ESZ & 10,890/NQZ), however, they would not re-enter negative territory.”
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.