Stocks Fulfilling 2nd Phase
05/28/16 Weekly Re-Lay:
“Stock Indices fulfilled the first phase of an expected late-April-to-late-June-decline – the initial drop into May 16–20th. That has triggered an ensuing rebound that could stretch into early-June…
Stock Indices fulfilled the outlook for an initial decline from April 19/20th into May 16–20th. At the time, the DJIA & ESM – and secondary Indices – held monthly support levels, signaling an intra-month low… and creating some resilience for the final 1/3 of the month.
That ~30-day/degree decline creates a corroborating high-low-(low) Cycle Progression that portends an intermediate low around June 20th. As described many times since the Jan. 20th lows were set, a ~5-month & ~10-month cycle also projects a low for the second half of June 2016.
In the interim, some Indices (Russell 2000) could set highs in early-June – perpetuating an overlapping 6-month/~180-degree cycle that includes a high (monthly close) in June ’14, a high in Dec. ’14 & subsequent highs in June ’15 & Dec. ’15. A high in early-June ‘16would perpetuate that Cycle Progression AND complete a 50% rebound in time (8 months down/4 months up).
The Russell 2K is also closing in on a .618 (price) rebound – at 1161.2. [The Russell 2000 has a consistent 8-month & 16-month cycle projecting its next lows for Oct. ‘16 & June ’17.]
Many Indices spiked up to their weekly LHRs – setting the stage for a multi-month peak in the coming week(s). Meanwhile, the DJ Transports reinforced the potential for a secondary (lower) high in this time frame. Their daily trend pattern – and a 21-day high-high-high-(high) Cycle Progression could stretch that as late as June 1st.
As long as the Indices do not give weekly closes above their April 19/20th peaks, the outlook remains for another leg down into late-June… with the final weeks of that decline being the most vulnerable to a sharp sell-off.” Equity outlook is still for an overall decline from late-April into late-June, before the next rally. An intervening high is expected in the coming week. Sharp 2–3 week sell-off likely, leading into potential late-June cycle low. Events surrounding June 23rd Brexit vote could exacerbate this.