Stocks Encounter Initial Resistance; Early-Jan. Remains Focus for Next Peak.
12/08/21 Weekly Re-Lay Alert – “Stock Indices continue to surge after bottoming in line with daily & weekly cycles lows in early-Dec, most synergistic on Dec 3/6. Weekly trend signals corroborated that outlook and helped pinpoint recent lows in various indexes. That was reinforced by price action with the NQ-100 dropping right to its initial downside target and ‘c = a’ objective on Dec 3, while retracing 50% of the Oct 4 – Nov 22 rally (15,565/NQH).
These indexes are also tracing out a textbook intra-month (bullish) scenario that begins with a sell-off in the first three trading days of the month. That ‘misdirection’ usually leads to an intra-month low on the 3rd or 4th trading day of the month without the intra-month trend turning down.
(A market needs to close below the low of the first three trading days, on any day after that, to turn a new intra-month trend down.)
The price action of the past couple months corroborates the intermediate outlook for sharp sell-offs into early-Dec (see Nov ’21 & Dec ’21 INSIIDE Tracks) followed by rallies into Jan ’22 – when a myriad of weekly and monthly cycles converge.
Intermediate cycles concurred, projecting peaks for Nov 4 – 9 and subsequent lows in late-Nov/early-Dec. That has been forecast to lead to a culminating rally into 1Q ’22 (ideally Jan ’22) – when the NQ-100 and the S+P 500 could set higher highs while many other stocks and indexes could diverge and set equal or lower highs.
Most indexes have added validation to this potential, turning their intra-month trends up in recent days. The NQ-100, however, still needs to give a daily close above 16,431/NQH to turn its intra-month trend up.
In the short-term, the DJIA just reached its weekly LHR level (extreme upside weekly target) at 35,825/DJIA while the S+P 500 and NQ-100 would need to surge higher (4751/ESH & 16,925/NQH) to do the same. It did that without turning its daily trend up.
That is a key level in the DJIA for multiple reasons (including those just cited). It would now take a daily close above 35,819/DJIA for the DJIA to turn its daily trend up and confirm a 2 – 4 week bottom. That precise level is also where it would need to close on Dec 31 to trigger a monthly 2 Close Reversal higher. So, it is monthly 2 Close Reversal Resistance during Dec ’21…
The Russell 2000, pictured on page 1, is also encountering pivotal resistance. It has rebounded to the midpoint of its 375-point trading range (2085 – 2460/QR, with a midpoint near 2272/QRH) as it nears a convergence of other intermediate resistance levels around 2280/QRH. It would need to close above that level to elevate the current bounce to a higher-degree rally and potentially spur a retest of the high.
As highlighted before, indexes like the DJTA & Russell 2000 completed what was likely their wave ‘5’ rallies (of an overall 5-wave advance from the March ’20 lows) in Nov ‘21 – peaking precisely at decisive upside targets and beginning a topping process that will likely extend into Jan ‘22. If the Russell 2K fails to close above 2280/QRH in the coming days, it could see another sell-off down to range support near 2085/QRH.”
Stocks set multi-week lows in early-Dec. and are expected to set the next intermediate peak in early-Jan – in sync with a ~2-month/~60-degree cycle that timed previous peaks in early-May, early-July, early-Sept & early-Nov ‘21. An ~8-month cycle – from the early-May ’21 high – concurs. The current test of weekly LHR levels projects an intermediate peak in the next 3 weeks – reinforcing the focus on early-Jan ’22.
What are ramifications of DJTA, Russell 2000 and NQ-100 attacking multi-month or multi-year upside targets?
What does this mean for next sell-off – after early-Jan. ’22 cycle high??
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.