Stocks Fulfill ‘Dangerous Day’ Outlook; Continue Bottoming Phase.
10/08/22 Weekly Re-Lay – “Stock indices have dropped below their mid-June lows, fulfilling the weekly trend and intra-year trend signals of mid-Aug and cycle downturn in mid-Sept. This reinforces the overall outlook for 2022/23 even as weekly cycles could produce a longer-lasting low at any time. The intra-month trends need to turn up to signal a multi-week bottom…
Stock Indices continue to attack major 3 – 6 month support levels and downside targets at 3560 – 3610/SPX and 10,700 – 11,100/NQ, perpetuating the wide trading range set by the decline of early-May – mid-June. They remain in intra-year (and weekly/monthly) downtrends after rebounding into mid-Aug ’22 and retesting year-opening lows – intra-year support turned into resistance – and reversing lower after failing to turn their weekly trends up.
On a near-term basis, they are fulfilling daily trend patterns & daily 21 MACs, two indicators (along with the intra-month trends) that failed to turn positive during the early-month rallies (first 3 – 4 trading days of the new month) to monthly resistance – where initial peaks were set.
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 without turning their daily trends up or being able to close above their daily 21 Low MACs. Those factors ushered in the potential for a quick sell-off.
In addition, the DJTA, 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 spurs a 1 – 3 day reactive sell-off. All those factors were colliding on Oct 6, leading to the warning of Oct 7 being a dangerous day for stocks.
10-06-22 – “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.
Stock Indexes still need daily closes above 30,455/DJIA, 3820/ESZ & 11,711/NQZ to turn the daily AND intra-month trends up and produce the first signs of anything more than 3 – 5 day bottoms. Other corroborating factors – like giving daily closes above the descending daily 21 High MACs – would reinforce (and/or lead) this scenario.
Until that occurs, stocks are still weak and congesting near their late-Sept lows.”
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.