Stocks Preparing for New Drop

06/01/16 Weekly Re-Lay Alert: 

“Stock Indices remain positive on a 2–3 month basis but neutral on a 2–4 week basis.  They fulfilled projections for an intermediate decline from April 19^th/20^th into May 19^th/20^th and have rebounded since.  A 50% rebound in time (~30 days down/15 days up) would produce a subsequent peak around June 3^rd.

That is corroborated by intermediate cycles in the Russell 2000 (and some related Indices) – projecting an intermediate peak in early-June by perpetuating a 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 ‘16 would fulfill that Cycle Progression AND complete a larger-degree 50% rebound in time (8 months down/4 months up).

The potential for a high around June 3^rd (+ or – 1 trading day) is corroborated by the month-opening range and the common pattern for an Intra-month X-X in which the S+P frequently trades in one direction for the first 2–4 days of the month and then abruptly reverses course (before/without triggering a new intra-month trend signal) and trades in the opposite direction for the remainder of the month.

There is also a developing ~90-degree Cycle Progression that would be reinforced by a midpoint high around June 3^rd.  Many Indices rallied for 3 months/~90 degrees, from Jan. 20^th to April 19^th/20^th.  That creates the potential for a subsequent high around July 19^th/20^th– a ~90-degree low-high-(high) Cycle Progression.  

And that would be validated by an interim high at the midpoint (~45 degrees) – on June 3^rd – creating a corroborating ~45-degree high-high-(high) Cycle Progression targeted for July 19^th/20^th.  The extent of the ensuing decline (after June 3^rd) would determine whether July 19^th/20^th would more likely time a higher high or a lower high.

The potential for an intermediate high this week is also bolstered by the (previously discussed) fact that many Indices spiked up to their weekly LHRs last week…As long as the Indices do not give weekly closes above their April 19/20^th peaks, the outlook remains for a new decline into late-June… as the next phase of a slowly-developing bear market.”   [Refer to June 1, 2016 Weekly Re-Lay Alert for additional details & trading strategy for Stock Indices.  Overall outlook remains intact (‘mirror image’ to 2000–2001 DJIA movement) and should extend the sideways action that has been unfolding since early-2015.  Significant decline not expected until late-2016… and into 2017.]