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today (Sunday) he notes, Cliff Note version by me
At this moment, the stock market is in a similar place last seen in 1929, 1987, 1997, and 2008. My first reaction is ... ARRRRRHHHHHHGGGGGG!
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Today's Market Comments:
Stocks fell sharply Friday, October 7th. The stock market has declined from the October 5th wave ii top, within a day of the Bradley model turn date of October 6th, and 2 days of the October 7th Phi mate turn date. These turn dates are kicking off what could be a volatile coming two weeks in the stock market. The top arrived very close to the target date and level that a small converging fan trend-line pattern suggested. Volume rose on the decline. Downside breadth dominated. The Industrials dropped 630, the S&P 500 lost 104, and the NASDAQ 100 fell 446.
The stock market formed a Bearish Island reversal pattern with Friday's gap down at the open.
The stock market sits on a knife's edge this weekend. It is about to enter a dangerous crash cycle time period from now through early November. Stocks could progressively decline with increasing intensity from now through October 21st, with the possibility of a lingering downdraft into November 4th. As it approaches its bottom, there could be a panic phase that results in selling capitulation. It is possible stocks could drop 15 percent or more during this coming decline. No guarantees, but the body of technical analysis says it is a solid possibility.
The 6 percent rally early this past week served the Bear's purpose of shaking out a lot of Shorts, and luring in Bulls. It is the typical final rally set-up usually seen before a crash.
At this moment, the stock market is in a similar place last seen in 1929, 1987, 1997, and 2008. It also sits in a similar cycle situation last seen in 1842 and 1932, both crashes. It will take a complete reversal of the hyper-inflation rate and the Fed's sledge hammer rising interest rate policy over the next few days to mitigate a coming purge. Absent that , , ,
Look, $40 Trillion of wealth has been wiped out from the 2022 Stock Market and Bond Market crashes - so far. That should be enough damage to slow aggregate demand and hyperinflation, which are lagging measures. The Fed should recognize this and cease and desist their insane assault on the economy. But charts are saying, for now, they won't.
The September 12th top was Minor degree wave 2-up of Intermediate degree 3-down for the Bear market of 2022. The decline since that high was the beginning of Minor degree 3-down, the first leg down being Minuette degree wave i-down, which bottomed on September 30th. The rally early this past week was corrective Minuette degree wave ii-up, which topped Wednesday, October 5th. If correct, a powerful decline is starting, wave iii-down of Minor degree 3-down of Intermediate degree 3-down. Wave threes are typically the most dramatic. The Elliott Wave mapping is in agreement with the dangerous crash cycle period starting now.
There is a large Converging Fan Trend-line pattern we show in chart on page 33. It suggests a powerful decline is imminent. It suggests stocks could drop hard into late October, or early November, confirming the Wave mapping model, and the crash cycle warning model.
As for the big picture, we must keep in mind that this is a major Bear market of Grand Supercycle degree that started in late 2021 (NASDAQ 100) and January 2022 (Industrials and S&P 500), so significant "negative" surprises are likely to come along that shakeup the markets.
The stock market topped on January 4th, 2022, then crashed to the low on June 17th. That was the first wave down of the Grand Supercycle degree wave {IV} Economic Ice Age Bear market that is now underway. Intermediate degree wave 1-down. The rally from June 17th through August 16th was Intermediate degree wave 2, a two-month, partial retracement of the 2022 six-month crash. Intermediate degree wave 3-down is just getting started. It could produce a powerful decline.
The VIX: If you go to the chart on page 80, we show another Converging Fan Trend-line pattern, with seven trend-lines, each having at least 2 touchpoints of tops or bottoms, all pointing to a singularity level and time point of 50ish for the VIX, likely in October 2022. If this is predictive, it confirms the Converging Fan pattern for the stock market. It is saying, as the stock market plunges over the coming month, the VIX will catapult at the same time, which one would expect from a sudden stock market crash.
Our Secondary Trend Indicator fell 7 (out of a possible 9) to Negative -46, remaining on a Sell signal.
There were several changes to our short-term key trend-finder indicators from Friday's decline. The Blue Chip key Indicator moved to Neutral from a Buy signal, as the Purchasing Power Indicator and 14 day Stochastic both generated Sells. The NASDAQ three-component key indicator generated a Sell signal. The Russell 2000 key indicator remains barely on a Buy signal.
Today's Mining Stocks and Precious Metals Market Comments:
Our HUI key trend-finder indicators remain on a Buy signal from Wednesday, September 28th.
On Friday, Gold fell 11.5. Silver fell 0.41, and Mining stocks fell 9.58.
Gold has been tied up in the Handle portion of its Large Long-term Cup and Handle pattern from 2012 for the past several months. There are typically two possible patterns for Handles. We show both of them from the textbook on page 71. Gold has chosen the more complex, time-consuming pattern. Once complete, a powerful rally will follow.
Silver is finishing a wave 4-down corrective decline. Once it bottoms, a strong wave 5 rally will follow.
The HUI key trend-finder indicator triggered a Buy signal September 28th, 2022, as the HUI 30 Day Stochastic triggered a Buy signal on September 9th, and the HUI Purchasing Power Indicator triggered a Buy on September 28th. 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 August 19th. On Friday, Demand Power fell 4 to 382 while Supply Pressure up 6 to 380, telling us Friday's decline was moderate.
DJIA/SPY PPI Fell 8 to - 108.69, on a Sell
DJIA 30 Day Stochastic Fast 10.00 Slow 14.00 On a Buy
DJIA 14 Day Stochastic Fast 26.67 Slow 38.33 On a Sell
DJIA % Above 30 Day Average 10.00
DJIA % Above 10 Day Average 30.00
DJIA % Above 5 Day Average 6.67
Secondary Trend Indicator Fell 7 to Negative - 46, On a Sell
Demand Power Fell 11 to 439, Supply Pressure Rose 17 to 529 Sell
McClellan Oscillator rose to positive - 115.58
McClellan Osc Summation Index Positive - 2133.21
DJIA 10 Day Advance/Decline Indicator - 252.1 on a Sell
NYSE New Highs 19 New Lows 397
Today's Technology NDX Market Comments:
The NDX Short-term key Trend-finder Indicators moved to a Sell signal Friday, October 7th, 2022, and remain there October 7th, 2022. The NDX Purchasing Power Indicator generated a Sell on October 7th, 2022, the NDX 14 Day Stochastic triggered a Sell on October 7th, 2022, and the 30 Day Stochastic triggered a Sell signal on October 7th, 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 Friday, August 26th, and remains there October 7th. On Friday, Demand Power Fell 6 to 400, while Supply Pressure Rose 10 to 450, telling us Friday's decline was strong, with deep pockets intervention supporting prices.
The NDX 10 Day Average Advance/Decline Line Indicator triggered a Sell signal September 21st, and needs to rise above + 5.0 for a new Buy. It remained at negative - 9.8 on Friday.
NDX 100 Purchasing Power Indicator Fell 11 to 172.94 On a Sell
NDX 30 Day Stochastic Fast 11.00 Slow 21.20 On a Sell
NDX 14 Day Stochastic Fast 34.00 Slow 57.80 On a Sell
NDX 10 Day Advance/Decline Line Indicator rose to - 9.8, On a Sell
NDX Demand Power Fell 6 to 400, Supply Pressure Up 10 to 450 Sell
RUT PPI Fell 4 at 154.12 On a Buy
RUT 10 Day Advance/Decline Line Indicator - 252.1, On a Sell
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 |
