Stocks Projecting Oct./Nov. ’16 Low
07/28/16 INSIIDE Track:
“Stock indices – in 2015/2016 – continue to validate expectations for a repeat of (resembling) 2000/2001 with volatile swings in both directions. Late-June cycle lows project a subsequent low in Oct./Nov. 2016…
Stock Indices have rallied sharply after fulfilling ongoing cycles that projected a multi-month low in late-June – the latest phase of ~5-month & ~10-month low-low cycles that have been the focus of recent analysis. The late-June low now creates a very consistent sequence of multi-month lows in late-Aug. ’15, late-Jan. ’16 & late-June ’16.
It was projected to spur a sharp rally into mid-July, with the DJIA expected to surge from key support (~17,100) to a convergence of 1–3 month & 3–6 month objectives at 18,600–18,700. At the risk of sounding like a broken record, this ongoing sequence of 2–3 month declines and 1–3 month rallies is reinforcing expectations that 2015–2017 would parallel 2000–2002 (particularly in the DJIA).
Since early-2015, I have been discussing the expected – and now unfolding – similarity/analogy between the stock market topping formation of 2000–2001 (and ensuing decline of 2001–2002) and what I expected for 2015–2016 (topping formation) and 2016–2017 (ensuing decline).
One expectation was that the DJIA would trade very similar to 2000–2001 in which it set a sequence of highs & lows in close proximity to each other (a wide trading range) for 15–18 months, before it was finally able to enter a more sustained decline.
The related parallel was that 2015–2016 would see the same kind of action – with the DJIA experiencing a series of 2–3 month drops and 1–3 month advances, contained within a wide trading range. A serious & sustained decline was/is not likely until late-2016… in conjunction with other cycles…
32–33 Week Cycle
Another topic of discussion – for the past 2–3 years (and for the decade before that) has been the recurring 32–33 Week Cycle – that has identified a series of Danger Periods (closely following the early-Sept. ‘14, late-Apr. ‘15 & mid-Dec. ‘15 peaks/reversal times).
The next phase of this cycle has arrived (next two weeks) and ushers in another Danger Period in the 1–2 months after early-August 2016. (See accompanying diagram, which has been featured in INSIIDE Track since 2013.)
That 32–33 Week Cycle – and the projected downturns immediately following mid-Sept. ‘14, late-Apr./early-May ‘15 & mid-Dec. ‘15 (all three of which emerged right on schedule) – strengthened the case for a more convincing decline in late-2016 – with the initial downturn likely to take hold in early-August…
An interesting aside to this 32–33 Week Cycle: At least one Index is showing that an intervening/offset 32–33 Week Cycle is taking hold and could be poised to time ensuing lows…
Over the course of the last two years, the Russell 2000 has suffered two ~7.5 month declines – each one lasting 32 weeks. If this cycle is to start impacting low-low cycles, the Russell could set its next important low in late-Sept. (or early-Oct.) ‘16. That would also be a geometric ~90 degrees from the late-June cycle low.
This could be a key cycle in the coming year(s) if Stock Indices fulfill the 1–2 year outlook and shift to a more bearish phase, beginning in late-2016…
Global Indices
China’s Shanghai & Shenzhen Composites remain relatively weak with the Shanghai spending most of its time in an intra-year downtrend…
Japan’s Nikkei 225 Index did rally into late-July after setting an intermediate bottom at its 2016 HLS (15,334), in sync with a 2-year high (2Q ‘08)–high (2Q ‘10)–low (2Q ‘12)–low (2Q ‘14)–low (2Q 2016) Cycle Progression AND a 19-week low-low-low Progression (next phase in Oct. ’16).
It has twice neutralized its weekly downtrend but would not turn that trend up – & confirm a multi-month bottom – until a weekly close above 16,939.
The German DAX Index is fulfilling analysis for a rebound into late-July/early-Aug. – perpetuating an ~8-month high-high-high Cycle Progression & a Golden Ratio, 10 month decline/6 month rebound (.618). This would also create successive, 6-month advances. 10,485–10,743/DAX is critical 3–6 month & intra-year resistance.
The FTSE has continued to rally on the heels of the Brexit vote, after pulling back to a secondary low in late-Junewhile spiking down to its weekly 21 Low MARC (5,771). That validated its (newly) ascending weekly 21 Low MAC – portending a new surge, in a textbook weekly MAC formation.
That action was confirmed by an outside-week/2 Close Reversal higher (on the heels of a weekly HLS signal) that projected a surge to test 6,750–6,800/FTSE. It is now fulfilling analysis for an overall rally (from Feb. 2016) into late-July/early-August and completing a .618 rebound in time (10 months down/6 months up).
A rally into early-August would also complete back-to-back 6-month/~180-degree advances (Oct. ‘14–Apr. ‘15 & Feb.–Aug. ‘16).
The CAC rebounded from its late-June cycle low, the culmination of a ~4-month high-high-(low) CycleProgression. Another low is possible in Aug. 2016 – the latest phase of a 6-month/180-degree low (Aug ‘15)–low (Feb. ‘16)–low (Aug. ‘16) Cycle Progression. That dovetails with analysis in US Indices (32–33 Week Cycle), that portends a dangerous period beginning in early-August.
Combining all these factors, I would keep my eye on France and Europe during the coming month(s). On a longer-term basis, the CAC-40 is one of the (technically) weakest Indices and has created a 1-year/~360-degree high-high cycle (Apr. ‘15–Apr. ‘16) that could prompt an overall drop into April 2017. If so, watch the Oct. ‘16 midpoint (that is also the next phase of the 4-month cycle).” [See Aug. 2016 INSIIDE Track for more detailed analysis]
Stock Indices poised for 2–4 month sell-off, beginning in early-August. Russell 2000 could produce subsequent low as early as late-Sept./early-Oct. Nikkei (Japan) & CAC (France) concur and project next pivotal (multi-month) low for Oct. 2016… while most domestic (US) Indices project Nov. 2016 multi-month low.
Larger-degree cycles remain focused on late-2016 for culmination of 15–18 month topping process (since May/June 2015) and transition into expected decline in 2017 (see 17-Year Cycle analysis). 4Q 2016 poised to be volatile period as monthly cycle low (Oct./Nov. ‘16) transitions into multi-year cycle peak (late-2016/early-2017).