Stocks Rolling Over to Downside
10/12/16 Weekly Re-Lay Alert – Stock Indices: Rolling Over:
“Stock Indices – in a growing similarity to May–August 2015 – have experienced a steady progression of successive highs as they show signs of rolling over to the downside. Each time a subsequent high is set, fewer Indices set new highs while more set a series of descending highs. Acceleration lower could be next.
At least one Index, the Major Market Index – began this sequence in July, when it set its highest peak on July 20th. The intra-month high set in July 2016 spiked above a series of highs set in Sept., Nov. & Dec. 2014, Feb., Mar., & Apr. 2015 – all around 1915–1920/MMX. However, it was not able to give a monthly close above those highs – signaling a failed retest of those highs.
On a daily & weekly trend basis, the MMX is similar to the DJIA & S+P 500, rebounding far enough to test daily trend resistance and then quickly turning back down. It is trading within a few points of 3-month lows and could easily turn its weekly trend & weekly 21 MAC down with just a small sell-off.
Other Indices set their highest highs in mid-August, adhering precisely to the recurrence of the 32–33 Week & ~66-Week Cycles and the entry into a pair of Danger Periods expected to follow…
Danger Period #1 was expected to be similar to May/June 2015 and trigger an initial drop between mid-Aug. & Sept. 26/27th.
Danger Period #2 was/is expected to be similar to July/Aug. 2015 and trigger a much sharper drop between early-Oct. & late-Nov.
While those mid-August peaks were being set, the MMX set a lower high… a subtle sign of rolling over to the downside.
A couple Indices (notably the NYSE & Russell 2000) spiked to new highs in September, even as the MMX, DJIA, S+P 500, OEX & others set a pair of lower highs… a more overt sign of rolling over.
And one Index, the NQ-100, retested its Sept. high on Oct. 3–7th – when a myriad of daily & weekly cycles converged. At the same time, the DJTA set new multi-month highs but only retested its 6-month & intra-year highs.
All of the other Indices, just cited, set lower highs (as the entire equity arena entered Danger Period #2, immediately after the Oct. 3–7th cycle highs) – a more convincing sign of rolling over to the downside.
As initial validation to this scenario – and to Danger Period #2 – the Indices saw a quick, sharp sell-off on Oct. 11th… another sign of rolling over to the downside. Another sharp drop could soon follow.
What would confirm this?
Before addressing that, let’s review the decisive nature of last week’s, last-gasp rallies – that fell short (of reaching new highs) in the majority of Indices…
They set divergent peaks on Oct. 3–7, perpetuating a consistent 24-week high-high-high-(high) Cycle Progression as well as a ~7-week low-high-(high) Cycle Progression (that next comes into play on Nov. 21–25, 2016)…
With the S+P & Nasdaq 100 turning their intra-month trends down, it also projects a drop into Oct. 14th/17th (mid-month), at a minimum. So, more downside is likely in the coming days. The action of the past two days corroborates that… [See complete 10/12/16 Weekly Re-Lay Alert for expanded analysis]
As discussed recently, the S&P has an intriguing range of extreme downside targets – that combines with the weekly 21 Low AMAC to create a pivotal & magnetic range of support at 2092.75–2103.75/ESZ.
However, if the S+P can give a weekly close below that range – still considered a distinct possibility – it would turn the weekly trend down, trigger a bearish 21 MAC signal and a bearish HLS signal… all in one fell swoop.
Reinforcing those potential signals, most of the Indices are poised to trigger another outside-week/2 Close Reversal lower – the third one (in some cases) since the mid-August peak.
Though the Dec. S+P futures missed (by 3 ticks) setting up this pattern, the S+P 500 cash index (SPX), S+P 100 cash index (OEX) & the S+P 500 SPDR ETF (SPY) are capable of corroborating that and creating a very rare weekly 3-Step Reversallower.
If all of the above occurs, it would turn focus to the key level – for all of the month of October – at 2017.25/ESZ, the monthly HLS for October (extreme intra-month downside target). That is also a range-projection target to the downside.
If a serious decline emerges, as cycles have predicted for this 4–6 week time period, that would be an extreme objective for the coming weeks – closely coinciding with the high of the 2016 year-opening range (2019.25/ESZ) and the current & next weekly 21 Low MARCs (2007 & 2026.5/ESZ).
Getting back to the ‘rolling over’ discussion, a sequence of lower highs needs to be verified by a corresponding series of lower lows. So, the Indices need to drop below – and close below – their Sept. lows in order to confirm this pattern and trigger the bearish scenario… [See complete 10/12/16 Weekly Re-Lay Alert for expanded analysis]”
Stock Indices confirming onset of 4–6 week drop into Nov. 2016. S+P 500 remains on track to ultimately reach extreme downside targets – at 2017.25–2026.25/ESZ – before bottom is likely. Nov. 21–25, 2016 is next phase of ~7-week high-high Cycle Progression… and could be decisive turning point.
Major Market Index peak in July reinforces potential for decline to stretch into at least late-Oct./early-Nov. – mimicking the 14-week decline of May–August 2015. Overall focus remains on late-2016 when 15–18 month topping process (from May/June 2015) is expected to shift into sustained downtrend. Monthly 21 MARCs pinpoint Dec. 2016–March 2017 as transitional period, when sustained downturn is most likely (see Tech Tip Reference Library for 21 MARC description & application).