Stocks Portend April 3/4 & April 17-21 Highs; Russell 2K Focused on June ’23 Cycle High.
04/05/23 Weekly Re-Lay Alert: Energy & Equity – The Three-Way Correlation – “A recurring topic of discussion involves the sometimes-close correlation between the movement of equity markets and energy markets. Sometimes that is merely a reflection of a growing economy (spurring demand for both) or some other factor spurring both of them higher. Occasionally, it is one driving the other – a true ‘correlation’… at least for that moment in time.
Even though trading off inter-market correlations is never advised (on its own), there are often times when cycles and price action/expectations in one can clarify cycles and expectations in the other. One of those times could be close at hand… and relies on analysis in a combination of the two – energy and equities – the XOI Index (Oil & Gas Stock Index).
The XOI has been adhering very closely to the outlook for late-2022/early-2023 and is nearing the time frame when a secondary high was/is most likely. To reiterate from the March 17, 2023 issue of The Bridge – Crude, Natural Gas & the XOI Index:
3-17-23 – “During the last half of 2022, one of the primary focuses (foci) in the energy sector was on the culminating advance in the XOI Index. It was fulfilling a textbook Elliott Wave sequence – dating back to its March ‘20 bottom – and just needed a final spike above its June ‘22 peak (1918/XOI) to fulfill a multi-year advance with a wave ‘5’ peak… The Sept ‘22 INSIIDE Track warned…
“One related factor that continues to be of interest involves cycles in the XOI (US Oil Index). Longer-term monthly and yearly cycles converge in 1Q ‘23 (almost all of them in Jan/Feb ‘23) and are most likely to time a peak.”..
January ‘23 XOI Cycle Peak
As it turned out, the XOI fulfilled both the weekly cycles (with an initial peak in Nov ‘22) and the monthly/yearly cycles (with a double top in Jan ‘23). Its Nov ‘22 peak timed a ‘3’ of ‘V’ wave high and left time for a quick ‘4’ wave pullback followed by a final ‘5’ of ‘V’ wave advance into Jan ‘23 cycle highs.
That fulfilled all of the upside price and timing expectations for a 3 – 6 month (or longer) peak. Soon after, the XOI triggered an intermediate sell signal…
One scenario that is shaping up for the XOI is a type of ‘flat’ or ‘irregular’ A-B-C’ correction. In either case, the index could see some additional downside in the immediate future (‘A’ wave low) and then rebound…
There are other factors that need to be considered, like the ~11-week cycle that precisely timed the Jan 23 – 27 peak and portends a subsequent (lower?) one on April 10 – 14, ‘23. That is also when a corresponding ~22-week high-high-(high) Cycle Progression portends a (likely) lower peak.”
The XOI – as well as Energy markets and key stock indexes – are all set up for intermediate highs during or surrounding the week of April 10 – 14, ’23. Among other things, that would fulfill the potential for convincing 2 – 4 week trends during the first ‘month’ of the Natural Year – from the vernal equinox (March 20) into the Date of Aggresssion (April 19).
The highs set in the coming week(s) should be pivotal for many months to follow…
Stock Indices are one of those complexes and have fulfilled the outlook for a surge in the NQ-100 from March 13/14 into April 3/4. They have now set the opening range for April (trading range of first three trading days of month), so daily closes above or below those ranges would hone the outlook into mid-April. In the case of the NQ-100, it needs a daily close above 13,349/NQM to project any further upside.
In the short-term, that index just pulled back to test (and initially hold) the levels of successive highs in Feb & Mar ’23 (~13,080/NQM) while testing and holding its daily HLS (extreme daily downside target). All of that reinforces the significance of today’s low (13,006/NQM). A daily close below that level is needed to signal a multi-week top. Until that occurs, the trend remains up.
The DJTA, Russell 2000 & S+P Midcap 400 turned their daily trends up while closing above their declining daily 21 High MACs on April 3. Both those signals project a reactive 1 – 3 day pullback (today was 2nd day), which has brought both indexes down to their daily 21 Low MACs while twice neutralizing their new daily uptrends… the ideal setup for a secondary low.
Combined with their daily 21 MARCs (an inversely-correlated indicator that will plunge for the next 5 trading days), these indexes are in the prime position to enter another 3 – 5 day surge… as long as they do NOT close below today’s lows. That dovetails with weekly cycles in the Transports that have been projecting a rally from March 24 into April 17 – 21.
The DJTA set its recent low while perpetuating a 3-month/~90-degree low (Sept 23) – low (Dec 22) – (low; March 24) Cycle Progression and had/has the potential to rally into April 14 – 21 when it would perpetuate an ~11-week high-high-(high) Cycle Progression and complete a .618 rebound in time (47 weeks down, 29 weeks up)… adhering to Natural Year cycles as well.”
Stock indexes are validating the onset of Natural Year 2023/24. The Russell 2000 – which has been the weakest index in recent months – illustrated this perfectly, fulfilling multi-month cycle lows on March 20 – 24, ‘23 (as well as a 3-Year Cycle from the March 20 – 24, ’20 low) and projecting a subsequent ~3-month rally into mid-to-late-June ‘23.
It bottomed in perfect sync with the onset of the new Natural Year and islikely to follow a textbook scenario in which a low around March 20/21 (Vernal Equinox) sets the tone, trend, and trading range for the ensuing ~year… and spurs an initial rally into April 19/20. That becomes the opening range – and breakout resistance – for the months that follow. Weekly cycles in many indexes – converging on April 17 – 21 – corroborate that and portend intermediate (2 – 4 week) highs during that week.
The NQ-100 and S+P 500 are still expected to see additional surge(s) in 2Q ’23 with the S+P 500 repeatedly validating analysis (first detailed in early-Jan ’23) for a rally to 4300 – 4350/ES.
How Do (Bullish) 4-Shadow Signals & Natural Year Analysis Concur?
What Does The Russell 2000 ~90-Degree Cycle Progression Portend for 2Q ‘23?
How Soon are Projected Tests of ~14,000+/NQ & ~4300 – 4350/ES Likely?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.