Stocks in Topping Mode; Early-Jan. Could Trigger New Sell-off After Divergent Peaks.
12/13/21 INSIIDE Track Update – “Stock indexes have surged after bottoming in line with daily & weekly cycle lows in early-Dec, most synergistic on Dec 3/6. Weekly trend signals corroborated that outlook and helped pinpoint recent lows in various indexes, while projecting subsequent rallies into early-Jan ‘22.
The action of the past several weeks corroborates the intermediate cycle outlook for sharp sell-offs into early-Dec, described in late-Oct and late-Nov (Nov ’21 & Dec ’21 INSIIDE Tracks)… while reinforcing the 3 – 6 month outlook for subsequent peaks in early-Sept, early-Nov and then early-Jan ’22.
The S+P 500 and Nasdaq-100 reinforced that timing with their weekly trend patterns and price action. The NQ-100 dropped 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). That set the stage for a new rally – ideally stretching into Jan ’22.
Much like the Russell 2000, the NQ-100 is trading in well-defined ranges – most recently trading from a mid-July low near 14,400 up to an early-Sept high of ~15,600 and back down to ~14,400 in early-Oct. It then rallied into late-Oct, back to 15,600 and above – surging to ~16,800/NQH in the weeks that followed (doubling the ~1,200/NQH range that had confined it between 14,400 and 15,600 for ~four months).
After testing 16,800, the Nasdaq 100 quickly dropped back to ~15,600/NQH – the level of the Aug/Sept ’21 high and the ceiling of the previous range (resistance turned into support) – retracing 50% of its Oct/Nov rally while pulling back right to the level of its rising weekly 21 High MAC…a very synergistic level of support for an intermediate bottom.
That portends a rally back to ~16,800 and [reserved for subscribers]… The overall equity market is still expected to set a more significant peak in 1Q ’22, most likely in Jan/Feb ’22. Upside targets (like the one just cited) are beginning to take form and will be addressed as they become more clear and credible.
Keep in mind as well: Daily and some weekly cycles peak in early-Jan ’22 while monthly and quarterly cycles peak in 1Q ’22 (more synergistic in Jan/Feb ’22).
These diverse cycles could combine and time a single peak. They could also, just as easily, time a pair of separate peaks – an initial one in early-Jan ’22 and a subsequent one possibly in Feb ’22. Do not assume, unless multiple indicators corroborate, that an early-Jan ’22 peak – if it occurs as expected – is automatically the final peak in this overall uptrend (from March ’22). Price action will be the key filter.
On a near-term basis, stocks have surged since dropping into Dec 3/6 cycle lows with the stronger S+P 500 and NQ-100 indexes remaining in weekly uptrends, projecting subsequent rallies into year-end.
The Russell 2000 and S+P Midcap 400 twice neutralized their weekly uptrends without turning them down, either. As a result, they are both in better positions to rally back to (and/or above) their Nov ’21 highs at some point in 1Q ‘22. However, they would need to turn their daily trends up – with daily closes above 2827/IDX & 2278/QRH – to confirm that an intermediate low is in place and to project a rally back to the highs. The Russell 2000 still has pivotal, longer-term resistance around 2460 that is expected to hold.
The S+P 500 and NQ-100 are similar to those two indexes in that they also need to turn their daily trends back up to project additional upside. Daily closes above 4705.0/ESH & 16,439/NQH are needed to turn those daily trends back up (that would also turn the intra-month trend up in the NQH) and confirm.”
Stocks are projected 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. Weekly trend patterns in multiple indexes project a rally into late-Dec and back to Nov ’21 highs before a new intermediate sell-off becomes likely.
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.