Stocks Signal 1 – 3 Day Bounce; Hint at Timing for Next Low.
Stocks Signal 1 – 3 Day Bounce; Hint at Timing for Next Low.
11/15/18 INSIIDE Track Stock Index Update: Stock Indices entered a new rebound immediately after turning their daily trends back down. That is a textbook pattern since that lagging/confirming indicator usually signals the end of the first leg (in this case, a decline) while looking ahead to a future decline after an intervening bounce. In Elliottt Wave terminology, it signals the culmination of a ‘1’ or ‘a’ wave move – letting a trader know that a ‘3’ or ‘c’ wave decline is on the horizon.
As observed previously, the daily trend reversals reduce the potential for new rebound highs (above last week’s highs) during the expected rally into DJIA cycles on Nov. 19 – 23. In contrast, they increase the potential that next week’s highs – if they materialize as expected – would be lower than last week’s highs…
By reversing higher today, equities left the Nov. 14 closes intact as the lowest closes of the latest sell-off – perpetuating an 11 – 12 trading day low-low-low-low-low-(low) cycle that has been in force since Aug. 23.
(It is also worth noting that gold stocks, the XAU Index, bottomed in sync with its Nov. 13 cycle low and has already rebounded ~6%. The daily trend pattern could confirm an intermediate bottom in the coming days.)
For now, the outlook has not changed for equities, looking for a low on Oct. 29, a sharp rebound into Nov. 5 – 9, a sell-off into this week and then another bounce into next week. That should set the stage for a new decline into December”
Stocks turned their near-term trends back down after fulfilling weekly cycle highs on Nov. 5 – 9. A brief bounce should stretch into Nov. 19 before a new downturn materializes. The action of late-Sept. – early-Nov. ’18 continues to reinforce expectations for late-2018/early-2019.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.