Stocks Fulfill Late-June Cycle Low
06/30/16 INSIIDE Track:
“Stock indices – in 2015/2016 – continue to validate expectations for a repeat of (resembling) 2000/2001 with volatile swings in both directions. Late-June cycle lows project a subsequent low in Oct./Nov. 2016…
Stock Indices experienced a sharp drop into late-June – completing declines (from mid-April) of ~10–15% in many Indices – perpetuating the ~5-month & ~10-month low-low cycles that have been the focus of recent analysis.
In the case of the DJ Transports – the Index that has been monitored as the leader since late-2014 – it dropped about 14% from its April 19th (Date of Aggression) peak. The Nasdaq 100 dropped about 9% from the same peak. This places all of the Indices at a critical juncture…
(The NQ-100 is one Index that could set another low in late-July – based on the synergy of multiple cycles & wave comparisons – but the price action of early-July would need to corroborate.)
In order to grasp the magnitude of this, the outlook should be broken down into multiple phases:
1 – First, there is the ongoing projection that 2015–2017 would look very similar to 2000–2002 (particularly in the DJIA) – in which the first ~15 months were a volatile affair… confined within a wide trading range…if that assumption is accurate, the sideways action could last into 4Q 2016 before a convincing decline takes hold.
That was/is corroborated by the price action of many Indices in late-Jan./early-Feb. 2016 – when they reached extreme downside targets and yearly support levels for all of 2016… while testing & holding their August 2015 lows. As stated since then:
That is when a 10-month low-low-(low) Cycle Progression (Oct. ’14–Aug. ’15–Jun. ’16) AND a corroborating (half-cycle) 5-month high-low-low-(low) Cycle Progression (Mar. ’15–Aug. ’15–Jan. ’16—Jun. ’16) recur and portend another low.”
Analogue Update
Last month, I illustrated a related similarity between the DJ Transports action of 1999–2000 and the DJ Transports action of 2015–2016. If the analogy was to remain pertinent, the Transports needed to see another quick sell-off – into a secondary (higher) low… in late-June 2016.
On page 5, I have reprinted updated charts – again illustrating the close parallels between 15+ years ago… and today. In both cases, the Transports continued their corrections and set lows that were moderately above the preceding low.
In 4Q 2000, the corresponding low arrived about 1.5 years from its 2Q 1999 peak.
In 2Q 2016, the corresponding low arrived about 1.5 years from its 4Q 2014 peak.
To reiterate, this analogy does NOT mean that every high & low in 2015/2016 would match its parallel high & low from 2000/2001. It also does NOT mean that every rally and/or decline would match the timing & magnitude of its ~15-year precursor. But, there are important – and sometimes uncanny – parallels that should not be ignored.
With the Indices entering an uncertain period (3Q 2016, when cycles could spur surprises in both directions – particularly now that the late-June low is taking hold above the late-Jan. low), there is another parallel that should be revisited. It has to do with a potential high and was reiterated last month:
2000/2001: The DJTA set a lower secondary peak, 20 months from its original May ‘99 peak.
2016: The DJTA is entering the 20th month since its Nov. ‘14 peak (in July 2016).
What this means is that the Transports could rebound back to [reserved for subscribers]…
The bottom line is that the Indices are fulfilling the latest 3–6 month outlook for another sell-off into – and intermediate low during – late-June (even though additional spike lows are possible) and the next important low is expected in 4Q 2016 (Oct. or Nov. ‘16). Beyond that, a more significant bottom is expected in June 2017 – in line with the 15–16 month cycle and other related cycles.” [See July 2016 INSIIDE Track for analysis on related Indices & markets.]
Stock Indices fulfill analysis for sharp drop into late-June cycle lows… and bottom above Jan. 2016 related low. Next important (higher?) multi-month low expected in Oct. or Nov. 2016… and could reveal implications for ensuing June 2017cycle low. Continued two-sided action expected throughout second half of 2016 with larger-degree cycles focused on late-2016 for culmination of 15–18 month topping process (since May/June 2015) and transition into expected decline in 2017(17-Year Cycle from 2000 decline).