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Today's Market Comments:
Stocks fell, then rebounded into the close Tuesday, July 5th, on average volume. They closed mixed. The Industrials ended down 129 after being down 700. The S&P 500 ended up 6 after being down over 70. The NASDAQ 100 closed up 194, and the small cap Russell 2000 rose 13.
The charts suggest that a massive stock market decline will likely be underway by mid-July. Take a look at the pattern in the chart on page 35. This is a large Rounded Bearish Top in the Industrials. It is complete, and textbook. This pattern has a neckline that has just completed. Waterfall declines often follow once the neckline is completed. This is precisely where the Industrials sit right now. We include a snapshot of the textbook resolution for this pattern.
Also, of serious concern right now, in the chart on page 37, we show that the Industrials have completed a right leaning Head & Shoulders topping pattern. This pattern predicts a soon-to-occur decline to 25,000 for the Industrials. This pattern does not predict a bottom. It gives a minimum downside target along the way toward a bottom.
I do not have any idea what fearful events, or "selling reason" events, are about to occur in July, but the patterns are telling us something is coming, and it is not going to be pleasant, to put it mildly.
On to the wave mapping, which fits with the warnings from the above two patterns. When the next plunge starts, depends upon which of two short-term stock market patterns are occurring. This coming waterfall decline will be three simultaneous wave threes down of three different degrees of trend, waves {3} down of 3-down of iii down.
This next decline, wave {3} down of 3-down of iii-down will perhaps be the worst since the Bear market started. It could be awful. There will be corrective bounces along the way, but the large degree trend is down hard, with lower highs and lower lows. Caution is warranted.
For the next week or two, stocks are in the proverbial calm before the storm. Wave {1} down bottomed two weeks ago, and wave {2} up is underway, and is correcting the recent wave {1} decline. This much we know.
It is possible that wave {2} topped on Tuesday, June 28th. My own feeling is, no, that was not the completion of wave {2}. One reason is that wave {3} down will be powerful, and is not likely to start out calmly, or with oscillating short moves like we saw this past week. Instead, it probably will begin with a bang, with panic selling. So, I am leaning toward the scenario that wave {2} will dangle out there until the middle of July, when the next key cycle turn dates are due.
Tuesday's oscillating moves fits the short-term "dangling" expectation.
So, let's examine the progress pattern for wave {2} up from June 17th. We believe it is likely that wave {a} up of {2} up topped Tuesday, June 28th, and the price movement since then has been part or all of subwave {b} down, with {c} up to follow and complete this corrective rise from May 20th.
So short-term, the key question is, what pattern is wave {b} down forming? Tuesday's price action eliminated one of the three possibilities for the Industrials and the S&P 500, the sideways triangle pattern for wave {b}. So it could be one of two remaining scenarios: First, an (a) down, (b) up, (c ) down move that completed; or Second, it is forming an (a) down, (b) up, (c) down, and finished the (b) up portion, with (c) down next taking stocks lower to complete {b} down. In the second scenario, wave {c} up will follow and likely complete the top for {2} in a few weeks, which is our highest probability scenario.
However, for the NASDAQ 100, the sideways triangle scenario remains in place for {b}. See charts on pages 39, 46, and 49.
Why are we focused on mid-July for trouble? In addition to the timing clues from the above patterns and wave mappings, there is both a Phi mate turn date (July 21st) and a Bradley Model turn date (July 15th) scheduled around the approximate same time period. The Bradley turn date is of major strength. Usually when both of these cycle turn dates occur close to each other, the odds are high that a significant trend turn will occur. So we are increasingly of the opinion that this could be the kickoff of the next major decline.
Trend turns during this Bear market throughout 2022 have been remarkably correlated with Phi mate and Bradley model turn dates.
Money can be made in this economic environment.
Our intermediate term Secondary Trend Indicator generated a new Buy signal June 21st, 2022. It fell 4 points Tuesday (out of a possible 9 points), to positive + 4.
There were no changes to our short-term key indicators from Tuesday's price action. The Blue Chip three component key indicator remains on a Neutral signal. The NASDAQ 100 three component key indicator remains on a Neutral signal. The small cap Russell 2000 remains on a Buy signal.
Our Blue Chip key trend-finder indicators generated a Neutral signal June 28th, 2022 and remain there Tuesday, July 5th, 2022. The Purchasing Power Indicator component triggered a Sell signal June 28th. The 14-day Stochastic Indicator generated a Buy on June 22nd, 2022, and the 30-Day Stochastic Indicator generated a Buy on June 23rd, 2022. When these three indicators agree, it is a short-term (1 week to 3 months' time horizon) key trend-finder directional signal. When these three indicators are in conflict with one another, it is a Neutral (Sideways) key trend-finder indicator signal.
Demand Power Fell 4 to 496 Tuesday, while Supply Pressure Rose 4 to 524, telling us Tuesday's move was moderate.
Today's Mining Stocks and Precious Metals Market Comments:
Gold fell 37.6 Friday. Silver fell 0.55, and Mining stocks fell 10.51.
Gold is tied up in the Handle portion of its Large Long-term Cup and Handle pattern from 2012. There are typically two possible patterns for Handles. We show both of them from the textbook on page 57. Gold has chosen the more complex, time-consuming pattern. Once complete, a powerful rally will follow.
As for Gold's wave mapping, in the charts on pages 55 through 57, we show the Handle for Gold's Cup and Handle pattern has morphed into a declining Primary degree wave (2) 3-3-5 Flat pattern. It is an Intermediate degree wave A-down, B-up, C-down move. Gold is now inside the final wave C-down, which is declining in a five subwave move. Gold finds itself inside the third of five subwaves for C-down. We show a potential downside price target in the chart on page 55. Once this pattern completes, a powerful Primary degree wave (3) rally will follow.
Silver is finishing a wave 4-down corrective decline. It has further downside needed to complete the pattern. We show the chart and a projected downside price target in chart on page 58. Once it bottoms, a strong wave 5 rally will follow.
In the charts on pages 59 and 60, we show the wave mapping charts for Mining stocks. They are dropping inside corrective wave ii-down. We show a projected downside price target in the chart on page 60.
The HUI key trend-finder indicator triggered a Sell signal June 13th, 2022, as the HUI 30 Day Stochastic triggered a Sell signal June 13th, and the HUI Purchasing Power Indicator triggered a Sell on June 13th. When these two indicators agree, it is a directional signal, and when at odds with one another, it is a combination neutral signal. The HUI Demand Power / Supply Pressure Indicator triggered a Sell signal April 21st. On Tuesday, Demand Power fell 3 to 361 while Supply Pressure rose 7 to 412, telling us Tuesday's decline was moderate.
DJIA/SPY PPI Flat at negative - 99.86, on a Sell
DJIA 30 Day Stochastic Fast 43.33 Slow 34.67 On a Buy
DJIA 14 Day Stochastic Fast 60.00 Slow 60.00 On a Buy
DJIA % Above 30 Day Average 43.33
DJIA % Above 10 Day Average 50.00
DJIA % Above 5 Day Average 50.00
Secondary Trend Indicator Fell 4 to Positive + 4, On a Buy
Demand Power Fell 4 to 496, Supply Pressure Up 4 to 524 Buy
McClellan Oscillator fell to positive + 50.72
McClellan Osc Summation Index Negative - 529.37
DJIA 10 Day Advance/Decline Indicator + 297.4 on a Buy
NYSE New Highs 4 New Lows 313
Today's Technology NDX Market Comments:
The NDX Short-term key Trend-finder Indicators moved to a Neutral signal Tuesday, June 28th, 2022, and remain there July 5th, 2022. The NDX Purchasing Power Indicator generated a Sell on June 28th, 2022, the NDX 14 Day Stochastic triggered a Buy on June 23rd, 2022, and the 30 Day Stochastic triggered a Buy signal on June 23rd, 2022. When all three component indicators are in agreement on signals, it is a consensus directional signal. When they differ, it is a sideways signal.
The NDX Demand Power / Supply Pressure Indicator moved to a Sell Signal Tuesday, June 28th, and remains there July 5th. On Tuesday, Demand Power Rose 4 to 429, while Supply Pressure Fell 5 to 437, telling us Tuesday's rise was moderate.
The NDX 10 Day Average Advance/Decline Line Indicator triggered a Buy signal June 24th, and needs to fall below negative - 5.0 for a new Sell. It fell to positive + 14.2 on Tuesday.
NDX 100 Purchasing Power Indicator Up 3 to 188.48 On a Sell
NDX 30 Day Stochastic Fast 38.00 Slow 30.80 On a Buy
NDX 14 Day Stochastic Fast 68.00 Slow 56.00 On a Buy
NDX 10 Day Advance/Decline Line Indicator rose to + 14.2, On a Buy
NDX Demand Power Up 4 to 429, Supply Pressure Fell 5 to 437 Sell
RUT PPI Up 1 to + 153.12, on a Buy
RUT 10 Day Advance/Decline Line Indicator + 216.60, On a Buy
McHugh's Market Forecasting and Trading Report and this Executive Summary from that report is an educational service providing a body of technical analysis that measures the possibility and probability of future changes in mass psychology (swings from pessimism to optimism and back) which identifies possible new trends in major markets within various time frames, from very short term (daily) through very long term (years and decades). The tools we use are based upon price patterns, indicators and other proprietary measures that we have identified as correlative to future market trends. While an investor or trader could come up with ideas and strategies from the information published in our reports, at no time should a reader or viewer be justified in inferring that any such advice is intended by this publication or our other services. We are not offering investing advice, but are only offering some (but not all) of the information that can be used in the investment decision making process with your own personal financial adviser. Investing carries risk of losses. Information provided by Robert D. McHugh's Market Forecasting and Trading Report is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your adviser to explain all risks to you before making any trading and investing decisions. Information contained herein is believed to be reliable, but the publisher cannot be held liable for errors or omissions. No specific advice can be construed from the following. The reader is solely responsible for all actions taken. Please refer also to our disclaimer in the back of the newsletter from which this Executive Summary is derived. Copyright c 2022 Robert McHugh |
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