Stocks Poised for 1Q ’17 Peak

 

01/19/17 40-Year Cycle: Stocks in 2017–2021

 

2017–2021

The Reaction…

          01-19-17 – Having closed the books on 2015/2016 – the first phase of a 40-Year Cycle transition – it is time to look ahead and scan the horizon for what could come to pass in the next 3–5 years…Similar to the ’Roadmap’ provided in late-2014 – for what was generally expected to unfold in 2015–2016 – this ’Roadmap II’ is intended to… revisit the basic expectations for the 40-Year Cycle…

A Generational Shift

Throughout the past decade, I have discussed my perspective on the uncanny 40-Year Cycle and what (I believe) it holds in store for 2017–2021.  Some of the most important clues were derived from previous phases of that 40-Year Cycle – a cycle that has governed the entire existence of America.  [If there were more documentation to back it up, I would contend the 40-Year Cycle has impacted most of human history.]

Those phases include the years of 1773–1781, 1813–1821, 1853–1861, 1893–1901, 1933–1941 & 1973–1981 – projecting focus to the 7th and most decisive phase in 2013–2021…

In most of those cases, the ‘3’–’6’ years (and into part of the ‘7’ year) would time the precursor events – the ramifications of which would be more strongly felt and recognized in the ‘7’–’1’ years (i.e. 1933–1936 & 1937–1941, etc.).

In many cases, the ‘7’ year also experienced serious ’Panics’ of some sort… a reaction to the events that had preceded it (see page 8).

In the current phase, that augured initial events (the projected ‘actions’) in 2013–early-2017 followed by the consequences (resulting ‘reactions’) in 2017–2021.  (That does not automatically project a panic in 2017, although there are some convincing down cycles from early-2017 into March 2018… see Dec. ‘16 & Jan. ‘17 INSIIDE Tracks.)…

Fiat Full Force

The latest phase of this 40-Year Cycle – in 1973–1981 – witnessed some repeated similarities… and some stark distinctions.  There was again a fierce battle between paper & hard currency – highlighted by these watershed events:

That perfect storm of inflationary events (all of which threw off the accountability & stability of gold-backed currency and flung open the door to inflationary paper currency) – triggered the most intense commodity inflation of the past century, most acute in 1977–1980.

During the 1977–1982 period, the stock market had two 15–18 month declines of 25–30% each.  In between those two declines, the DJIA had two additional noteworthy drops – lasting 2–3 months each and shedding 15–20% of its value, each time.

So, in that 4–5 year period, there were four stock market declines of 15–30%.

That is just one of many reasons (cyclical, technical, fundamental, geopolitical, climatological, geophysical, etc.) I have been expecting 2017–2021 to produce similar economic challenges… and why I still expect a more overt bear market to take hold in stocks in 2017/2018 – following the anticipated 15–18 month topping process in 2015/2016.

In some ways, 2017–2022 could possess similarities to 1977–1982, particularly [reserved for subscribers]…

That is why an expanded & more complex corrective phase has been anticipated, beginning with the late-2014/early-2015 peaks forecast to usher in a 1–2 year (subsequently honed to 15–18 month) topping process once a multi-month high was in place.

That topping process was projected to stretch out into late-2016 and include multiple 2–3 month sharp declines followed by an equal number of ensuing 1–3 month strong advances – resulting in a wide but somewhat trendless (when viewed from a multi-year perspective) trading range.

That would be the first of multiple phases (since the culmination of a 40-Year impulse wave would take many years to completely correct) and should then usher in a time when a more convincing & sustained downtrend would take hold – beginning in early-2017.  That would be the onset of the second phase.  (Currently, cycles argue for 4 or 5 primary phases to this overall corrective phase.  They [reserved for subscribers]…)

Cycle Control: C. & C. v C. & C.

Within that 2-year time frame – in 2015–2016 – a few key cycles were used to time the subsequent highs, lows & intervening ‘danger periods’ expected during that topping process.  A large part of that was based on when the most significant multi-year cycles were converging & corroborating (each other) versus when they were conflicting & competing for control.

That is important to recognize & review, since it has a strong influence on expectations for 2017–2018.  During the entire 2015–2016 period, one specific 4–5-month period provided the greatest synergy of cycles pointing in the same direction – down.  Of those cycles, several provided a powerful argument for a sharp drop in that period – the middle chunk (~1/3) of 2015…

Those cycles were led by the 17-Year Cycle but powerfully corroborated by a related 7-Year Cycle & 14-Year Cycle – all projecting a sharp drop during the middle ‘third’ of 2015.  [See pages 12–13 for related analysis from 2014 & 2015.]  That was forecast to time the first phase (down) of this overall topping process.

After that point, cycles would diverge for a while – some pointing up while others pointed down – reinforcing the likelihood for a 15–18 month period of volatile but somewhat directionless trading as the bulls & bears feverishly fought for control.

During that period, from late-Sept. ‘15 into late-2016, shorter-term cycles – most notably the 32–33 Week Cycle between highs & the 5-Month Cycle between lows – were used to time expected swings.

Early-2017 is when the majority of primary cycles would again be turning down at the same time… particularly in March/April 2017 (through 1Q 2018) – after the final 17-Year Cycle peaks.   [Accompanying cycle diagram is to illustrate overlap with 40-Year Cycle peak.  For actual Cycle Progression location of 2017 cycle, see page 7.]…

The following is a brief synopsis of the primary cycles & what they were (and are) forecasting for the period of 2015–2022.  The greatest synergy of down cycles was/is in late-April–late-Sept. 2015 & again in March 2017–March 2018.  Sequential up cycles were seen after each phase of the 5-month low-low cycle.

 

40-Year Cycle – Topping in 2015/2016, initial down wave in 2017/2018, second wave down in 2019–2021.  [Next up cycle begins in 2022/2023.]

14-Year Cycle – culmination of 1–2 year declines in 1974, 1988 (Oct.-Dec. ‘87), 2002 & 2016.

10-Year Cycle – Peaks in 1987, 1997, 2007 & 2017 (up phases in 1985–1987, 1995–1997, 2005–2007 & 2015–2017).  Declines into/through ‘8’ year.

7-Year Cycle – 12–18 month peak & down phase in 2000–2002, 2007–2009, 2014–2016.

66-Week (15–16 month) Cycle – Peaks in late-April/early-May 2015, early-to-mid-August 2016 & Nov. 2017.  2–3 month declines expected to follow.

32–33 Week Cycle – Peaks in late-April/early-May 2015, early-Dec. 2015 and then early-to-mid-Aug. 2016.  1–2 month declines expected to follow.

5-Month Low-Low Cycle – Lows in Aug. 2015, Jan. 2016, June 2016 & Nov. 2016.  1–3 month strong advances expected to follow each.

When you put all these together, the result is a convincingly bearish period in late-April–late-Sept. 2015, followed by more disjointed cycles in 4Q 2015–4Q 2016… before another synergistic period of negative cycles resumes in 2017 (watch 2Q ‘17).

A little broader period of negative cycles existed from 4Q 2014 into 1Q 2016, including a second period of trouble forecast for Dec. ‘15–Feb. ‘16.  The latter phase of that period did not have the 17-Year Cycle corroborating it, but still had the synergy of the 32–33 Week, 5-Month Low-Low, 7-Year, 14-Year & 40-Year Cycles all projecting renewed selling.

The Ultimate Filter

Price action held an even greater sway… since it represents the ultimate filter for any analysis.  Perhaps the most significant price action occurred in late-Jan./early-Feb. 2016 – when almost all of the primary Indices dropped to monthly HLSlevels (extreme intra-month downside targets that, when met, portend an imminent multi-quarter bottom).

At the same time, those Indices also reached their 2016 Projected Lows (Yearly SPS) – a level that represents the most important support level for the entire year… and which is usually not reached until mid-year or even late-year.

The third decisive indicator was the monthly trend indicator, which failed to turn down in most Indices (after the prevailing monthly uptrends had generated multiple neutral signals, despite many Indices spiking to new lows).

The synergistic combination of these multi-month, multi-quarter & intra-year indicators and support levels signaled that the Jan./Feb. 2016 lows were a more significant bottom (than the Aug./Sept. 2015 lows) and were more likely to hold for the foreseeable future…

The action leading into & out of Jan./Feb. 2016 powerfully reinforced the 2015/2016 outlook – for ~18 months of volatile, sideways trading as a multi-year top unfolded – and strengthened the cyclic outlook for 2016.  (It also perpetuated a 7-Year Cycle of Crashes in which 30–50% losses were suffered in a large number of stocks & Indices.)

That outlook anticipated two ensuing multi-month lows to take hold in June and then Oct./Nov. 2016… both of which were to be followed by strong multi-month advances (the pattern projected for all of 2015/2016).

The accompanying table includes a small – but very diverse – sampling of the US stocks that were hammered during the 2015/2016 Crash Cycles, including Tech & Consumer stocks, Energy & Metals/Resources, Health & Medical, Retail & Shipping, Airline & Auto, Banking, Credit & Media.

While some of the biggest drops took hold during the late-April–late-Sept. ‘15 period (17-Year Cycle of Stock Corrections… timing ~20% declines), the overall declines continued into 2016 – completing a 7-Year Cycle between lows (2002–2009–2016).

 

 

 

That, too, has important implications for the coming years [reserved for subscribers]…”

 

See Complete 14-page 40-Year Cycle: Stocks in 2017–2021 for details concerning 2017 & 2017–2022, including analysis on ‘Outlook 2017: Cycles’, ‘Outlook 2017: Wave Structure and related discussions including where a multi-year bear market could ultimately take one key Index.

 

Stock Indices complete 2015/2016 topping phase & enter period when greatest synergy of multi-year cycles projects a Major top & reversal lower.  Analysis & trading strategies in Gold, Silver, Dollar, Interest Rates & Commodities corroborate this revealing outlook.  See Weekly Re-Lay & INSIIDE Track for additional details.