Stocks Project Jan. 20 – 24 Peak & Subsequent Sell-off; Early-Jan. Lows Concur.
01/08/20 Weekly Re-Lay Alert: “Stock Indices repeated their ~30 & ~60-degree/day cycle pattern, spiking sharply lower in the opening days of the new month BUT not turning their intra-month or daily trends down. Most indexes spiked down to rising daily 21 MACs and daily HLS levels before reversing higher.
The Nasdaq 100 already turned its intra-month trend up but the Dow & S+P 500 would need to generate daily closes above 28,872/DJIA & 3263.5/ESH (and 10,994/ DJTA) to turn their respective intra-month trends up and project additional upside into mid-month.
Contrasting that are expectations for at least a 1 – 2 month peak in Jan. 2020 – fulfilling a ~16-month low (Oct. ’14) – low (Jan. ‘16) – low (May ’17) – high (Sept. ’18) – high (Jan. 2020) AND an ~8-month low (Jan. ‘16) – low (Sept. ‘16) – low (May ’17) – high (Jan. ’18) – high (Sept. ’18) – high (May ’19) – high (Jan. 2020) Cycle Progression.
If that high stretches into the second half of Jan. ’20, it would also mimic how 2018 began – the latest phase of the 2-Year Cycle. In that case (and several prior instances on a two-year interval), it led to a sharp sell-off into early-Feb.
That 2-Year Cycle provided great clarity in Sept./Oct. ’18, including this analysis:
9-26-18 – “One of the most consistent cycles in equity markets is an approximate 2-Year Cycle (accounting for similar consistency in a corresponding 4-Year Cycle and even 8-Year Cycle).
This 2-Year Cycle has multiple facets, including the timing of related moves at a ~24-month interval. This is more likely when the market has been in a similar trend for several years.”
In many instances, those similar moves will be on progressively higher or lower degrees (magnitudes) due to the progression of higher and lower magnitude waves.
A perfect example involved the following sequence on a 2-year interval:
– A moderate sell-off that bottomed on Feb. 3 – 12, 2014 (~1250/DJIA points or about a 7.5% decline).
– A sell-off of one larger degree that bottomed on Feb. 3 – 12, 2016 (~2500/DJIA points or about a 14% decline)
– A sell-off of one larger degree that bottomed on Feb. 3 – 12, 2018 (~3250/DJIA points or about a 12% decline).
Previously, the DJIA also had a decline of 900 points or 8.3% that bottomed on Feb. 3 – 12, 2010.”
Could the pattern repeat in Jan./Feb. 2020?
At least one other cycle lends some credence to this scenario. It is the 11 – 12 week cycle that has governed action in the DJ Transports throughout the past two years, beginning with that Jan. ’18 peak.
The next cycle in that sequence (illustrated on this page) is expected to be a subsequent high and comes into play on Jan. 20 – 24 (Jan. 27 – 31, at the latest) – when another 1 – 2 month peak is expected.
There are other (general) similarities to early-2018. 2017 was an up year, interrupted by a multi-week sell-off in Aug. ‘17.
2019 was similar.
In 2017, that uptrend resumed and carried stocks higher into Jan. 15 – 26, ‘18 before undergoing a sharp, 2 – 4 week drop into early-Feb. ‘18.
In 2019/2020, stocks resumed their uptrend after fulfilling late-Aug. ‘19 cycle lows and could extend a final peak into the second half of January ‘20… before experiencing a quick, sharp drop into early-Feb. ’20.”
Stock indexes remain focused on an uncanny convergence of weekly, monthly & multi-year cycles aligning in late-Jan./early-Feb. ’20 – when an uncanny 2-Year Cycle will join the 40-Year Cycle (as well as the 8-Month & 16-Month Cycles) and project an intermediate peak and quick, sharp sell-off. The early-Jan. ’20 lows corroborated that scenario and set the stage for an ensuing rally into Jan. 20 – 24.
What would a peak on Jan. 20 – 24 signal for 1Q/2Q 2020?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.