Stocks Retest Highs, Prepare for Late-May Sell-off; Mid-June = Ideal Time for Bottom.
05/15/24 – “Stock Indices remain in the second stage (a multi-week reactive rally from the April 19th lows) of what is expected to be a 2 – 3 month correction after fulfilling multi-year upside price targets & cycles in all six indexes in 1Q 2024. In Elliott terms, they are in a likely ‘b’ wave bounce – sandwiched between an initial ‘a’ wave decline and a future ‘c’ wave decline.
As described in early-to-mid-April, the weekly trends would be the key as to what to expect following a multi-week low (that was forecast for ~April 19th)…
The ‘a’ wave sell-off fulfilled analysis for an initial drop from late-March into April 19th – enveloping the Month of Aggression (leading into the Date of Aggression)… the DJIA & NQ-100 had twice neutralized their weekly uptrends but failed to turn them down (on April 19th).
That signal also routinely times a multi-week low but projects a rally back toward/above the previous high. On May 3rd, the DJIA re-entered its weekly uptrend – corroborating that.
Following the April 19th low, Stock indexes quickly turned their daily trends back up, confirming a multi-week rally was likely unfolding. Those daily trends have not turned down since then (and have not even turned neutral since May 2nd) and were soon reinforced by the new intra-month trends turning up in May ’24.
That trend signal projects rallies into (at least) mid-month and up to (at least) monthly resistance ranges, reinforcing the significance of the ‘Decision Days’ on May 2nd and May 6th – both of which generated positive signals on a 1 – 2 week basis.
That is where equities find themselves, having rallied into mid-May (May 15 – 17th) – testing and/or exceeding their respective monthly resistance ranges and nearing a new Decision Day.
The DJIA & NQ-100 just retested their March 2024 highs, initially fulfilling their April 19th weekly trend signals.
In contrast, the Russell 2000, S+P Midcap 400 (for the moment) and DJTA remain below their March ’24 highs.
The S+P 500 is also retesting its March ’24 high, violating what had been expected (a lower high) for that index. That does not yet violate its weekly trend pattern but does show related analysis was wrong. The May 17th weekly close (above or below the 5333/ESM previous peak) should help clarify that.
The S+P 500 is testing the upper extreme of its monthly resistance, its recent peak AND a pair of recent weekly LHR levels (extreme upside targets on a 1 – 2 week basis) – at 5326 – 5329/ESM. If it spikes higher and reverses lower – before the May 17th close – the S+P 500 would still be signaling a ‘b’ wave peak.
For now, the weaker three indexes are reinforcing the same conclusion. In addition, the Russell 2000 has rallied into the latest phase of a ~1.5-month high-high cycle that has timed multi-week highs in late-Sept, mid-Nov. & late-Dec. ‘23 and then mid-Feb & late-March ’24… projecting a future high in mid-May 2024.
For most of the past ~4.5 months, the Russell 2K has traded inside the range it set during a ~3-week sell-off on December 27th – January 17th. It just closed at the high end of that range…
The Russell 2000 has just rallied into mid-month and mid-week, testing its weekly resistance (2122 – 2139/ QRM) and a myriad of daily upside targets (2120 – 2132/QRM) that include three daily LHRs…
All of this remains in the context of the 2024 outlook for a multi-month high in 1Q ’24, a multi-month low by/in June ’24 and a larger-magnitude peak in the second half of 2024… ushering in the 17-Year Cycle of Stock Market Declines leading into 2025.
1 – 3 month & 3 – 6 month traders could have exited a portion of long positions in March and be looking at mid-June ’24 as the ideal time for the next multi-month low.”
Stock Indexes are retesting intra-year highs and poised for a new decline in the second half of May 2024. Divergent lows are expected in late-May and mid-June – the time when a multi-month bottom is most likely in most indexes – before rallies into July ‘24.
The stronger NQ-100 remains positive (see related 17-Year Cycle analysis and what that could mean for July & October 2024) and could/should adhere to the general intra-year parallel to 2007 (successive highs in 1Q, July, and then October ’24… similar to 2007). The DJTA is increasing the potential for a multi-month low in mid-June ’24 (June 17/18th = greatest synergy of cycles for a bottom) – in line with a powerful convergence of cycle lows in that index.
How Long Could Mid-June ’24 Cycle Low Hold?
How Does This Correspond to 17-Year Cycle of Stock Peaks Likely in July & October 2024?
Does This Corroborate the Projected 2025/26 Recession Cycle?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.