Stocks Validating Latest Cycle High

05/11/16 Weekly Re-Lay Alert: ‘Is the Snowball Slowly Rolling’ 

“As stated last week, an eerie calm had shrouded the Asian markets since late-January… when they completed their latest sharp sell-off.  That was expected to lead to a multi-month period of consolidation, capped off with another sharp sell-off in late-April–late-June 2016.  

While U.S. Indices experienced strong rebounds in the interim – another parallel to 2000–2001 – many of the Asian Indices made little upward progress.

Of the domestic Indices, the Nasdaq was one of the weaker bounces – relatively speaking – rebounding to its early-January peak but never exceeding that level.  Dissecting that Index a bit – while also noting the connection to Asian Indices (and slowing economic growth in China) – AAPL provided a perfect reinforcement to what was/is expected in 2016.

It is worth reiterating that analysis (so please forgive the redundancy) since it could be the trigger for a sharp drop between now and late-June… and that trigger could be close to ‘firing’…

For almost three months, AAPL slowly but steadily rebounded from its late-Jan. low – which was the retest of its late-August low (double bottom), which was the culmination of a 30+% meltdown from its late-April 2015 peak.  So, it had sold off sharply for 9 months and then bounced for 3 months.

And then, in a matter of days (11 trading days, to be exact) it swiftly gave back all the gains of the preceding 3 months… corroborating that a bear market is intact and that more downside is likely.  The current decline began immediately after AAPL had peaked during the latest phase of a 23–25 week low-high-high-high-high-(high) Cycle Progression – dating back to the June 2013 bottom – that now projects a 23–25 week decline…into late-Sept. ’16.

Even more significant, the latest plummet – which occurred exactly 360 degrees from the onset of its overall decline (late-April 2015 & late-April 2016, immediately following the ominous Date of Aggression) – took AAPL back to multi-year price support at 92–95.00.  To recap:

— The Oct. 2014 mini-meltdown bottomed at 92.00–95.00/AAPL.

— The August 2015 meltdown bottomed at 92.00–95.00/AAPL.

— The January 2016 meltdown bottomed at 92.00–95.00/AAPL.

— The April 2016 mini-meltdown has just reached 92.00–95.00/AAPL.

If it is true that ‘double bottoms hold, triple bottoms don’t’, it is even more likely that quadruple bottoms do not hold.  And that is essentially what AAPL now has at 92.00–95.00/AAPL – a quadruple bottom.  That is also the mid-point (~95.00/AAPL) of its 4.5 year trading range – with a lower extreme around 55.00 and an upper extreme around 135.00.

When that support (92–95.00) gives way, an accelerated drop to [reserved for subscribers only] would become much more likely.  But it is not just AAPL reinforcing the ominous expectations surrounding the April 19^th Date of Aggression…

While AAPL was plummeting, GOOG also dropped sharply (~11%) – after peaking on April 19^th.  SBUX – though not a tech stock (but a ‘proxy’ I watch closely) – dropped similarly (~10%) in late-April… all helping to lead a reversal lower in the Nasdaq 100 and cast some renewed uncertainty on that Index…

So, it looks like many of the ‘ducks are in a row’ for another quick sell-off leading into late-June – the next phase of 5- & 10-month cycles…

Stock Indices are increasing the preliminary signs of reversing lower – led by the Nasdaq 100 & tech stocks – initially validating analysis for a late-April–late-June decline.  The NQM peaked on April 19, 2016 – the latest phase of a 19–20 week low-high-high-high-(high) Cycle Progression dating back to the mid-Oct. 2014 spike low – and triggered initial sell signals on April 20^th (daily) and April 22^nd(weekly).

Most of the other Indices also peaked on April 19^th or 20^th – in perfect unison with the Date of Aggression.  Those highs occurred ~90 degrees from the Jan. 20^th spike lows in so many Indices… as well as the latest phase of the DJIA’s 24-week high (Dec. ’14)–high (May ’15)–high (Nov. ’15)–high (April 18–22, 2016) Cycle Progression.

That triggered a sell-off – in all the Indices – into early-May…They reversed lower today with the DJIA re-entering its daily downtrend – key validation to that negative signal.

Just as intriguing – and a corroborating signal that is about to reach fruition – the DJIA & ESM sold off just enough to trigger a daily 21 MAC reversal lower (tomorrow) if they sell off even the slightest amount.  

That potential (pinpointed by the related daily 21 MARCs that would become a negative factor beginning on May 11^th) was one of the myriad of factors anticipating a mid-week rebound high and the onset of a new wave down.

So, now comes confirmation time… when the Indices need to intensify today’s declines and quickly confirm these short-term reversal signals.  As stated last week, the DJIA is developing a synergistic web of key support and/or extreme downside objectives… That range comes into play at 17,076–17,176/ DJIA and includes the monthly HLS, weekly HLS (2), weekly 21 Low MARC & weekly 8 Low MARC.  If the DJIA sets an intra-week low (this week) around 17,500, it would reinforce that target zone.”