Forecast: A Cyclical Look At US Stocks

Last week's action saw gold forming its high in Monday's session, here doing so with the tag of the 1323.60 figure (April, 2019 contract). From there, weakness was seen into a Thursday low of 1306.40 - before bouncing off the same to end the week. With the gold market consolidating its recent gains, I thought that we would take a closer look at U.S. stocks this weekend, and the cycles that are currently influencing this particular market.

The Time Cycles

With the recent action, the 45-day cycle is seen as 30 days along and is labeled as neutral. The larger 90-day cycle is seen as 30 days along and is regarded as bullish, with the 180-day wave seen as 30 days along is also labeled as bullish. The 360-day cycle is also seen as 30 days along and is regarded as bullish, with the larger four-year wave seen as 753 days along, and is still labeled as bearish into the Autumn of 2019 or later.

The 45 and 90-Day Cycles

As noted above, the 45-day cycle (next page) is seen as 30 days along and is currently labeled as neutral. The larger 90-day wave is also seen as 30 days along and is still regarded as bullish into what is looking to be the month of March.

The last labeled bottom for the 45-day cycle was the 12/24/18 low of 2346.58 on the SPX, with the subsequent analysis calling for a minimum rally back to the 35-day moving average in the days/weeks to follow. In terms of time, this wave was seen as heading higher into the late-January to early-February timeframe, with the patterns favoring its upward phase to remain below its prior peak of 2800.18 on the SPX.

In terms of price, the ideal path - as noted in the daily reports - called for a rally up to the 2713-2740 SPX CASH region, before topping this 45-day component. With the action seen into late last week, this wave may well have topped with the recent tag of the 2738.98 SPX CASH figure, though there is no actual confirmation of the same. However, if this number was not the peak for this wave, then the next new price high would be favored to top the same. Here is a look at our 45-day cycle in stocks:

In terms of time, the next trough for the 45-day cycle is due around the February 21st timeframe, but with a decent plus or minus variance. In terms of price, the ideal path would favor a drop back to the 35 and/or 50-day moving averages on the SPX, with the patterns looking for a countertrend decline into the next 45-day bottom. If correct, higher highs should follow on the next swing up into March, due to the configuration of the larger 90-day wave, which is shown on our next chart:

Stepping back then, higher highs into March could well end up as the peak for the year 2019. Regardless of whether this ends up as the case, what follows should be a sharp correction into the April-May timeframe, where the next 90-day trough is projected. In terms of price, the current upward phase of this 90-day cycle could reach up to the 2780-2840 SPX CASH region before topping, with its next downward phase expected to see the 70-day moving average acting as the minimum.

Stepping back further, a low with the 90-day wave around April or May should give way to another sharp rally into what is projected to be mid-Summer of this year. If the current move up is going to end up as a countertrend affair - against the larger four-year cycle downward phase - then, as noted above, the peak made in March has some odds of ending up as the high for the year, with the mid-Summer high being the next ideal timeframe to do so. 

The 180-Day and 360-Day Cycles

The 180-day cycle (chart, above) is seen as 30 days along and is labeled as bullish, with the larger 360-day wave seen as being in the same configuration - with the combination of these waves pointing higher into at least the month of March, but, potentially, into mid-Summer          

From the comments made in past articles, the assumption was that the 180 and 360-day cycles for U.S. stocks likely troughed at the late-December bottom of 2346.58 on the SPX. With that, the 200-day moving average was noted as the upside price magnet to the upward phase of these waves, which was basically hit with the action seen early last week. Having said that, there is the decent potential that a test of the mid-2800's or better will eventually be seen. Here is the 180-day cycle, in chart format:

Stepping back, due to the configuration of the larger four-year cycle, the next mid-term price peak is expected to come from these smaller 180 and 360-day cycles. In terms of patterns, until proven otherwise the overall assumption is that the upward phase of these 180/360-day cycles will end up as countertrend, holding below the 2940.91 swing top, seen back in September of last year.

Going further with the above, a countertrend high with the 180 and 360-day cycles, if seen as expected, should give way to a sharp correction on the next downward phase of these waves into the Autumn of 2019 to Spring of 2020 timeframe. If seen, that move would be the odds-on favorite to trough the larger four and nine-year cycles, for what is anticipated to be a sharp rally into the 2022-2023 timeframe. Here again is our four-year cycle:

The Four and Nine-Year Cycles

The four-year cycle is seen as 753 days along and is currently labeled as bearish, along with the even-larger nine-year component. The next low for these cycles is projected to occur sometime between the Autumn of this year and the Spring of 2020.

The last low for the four-year cycle was registered back in February of 2016, with the upward phase of the same pushing the SPX CASH all the way up to a high of 2940.91, made back in September of last year. From there, its downward phase was recently confirmed to be in force with the December, 2018 monthly close.

In terms of price, when the SPX hit the 48-month moving average with the decline into late-December, 2018, any minimum expectation would have already been met with this four-year wave. Having said that, with the larger nine-year cycle also seen as pointing south, the downside risk is down to the lower 96-month moving average.

Going further with the above, following the late-December bottom, a sharp rally was expected to play out before the four-year cycle actually attempted to trough, with that rally coming from the smaller-degree 180 and 360-day cycles - and which is currently in force. In terms of patterns, the current upward phase of the 180/360-day waves is currently assumed to end up as a countertrend affair - holding below the September peak of 2940.91 on the SPX.

Stepping back then, the ideal path favors the current upward phase of the 180 and 360-day waves to end up as a countertrend Elliott 'B' wave. If correct, the next downward phase of these cycles should take the SPX back below the 2346.58 swing bottom into the Autumn of this year or later, a move which would be the odds-on favorite to trough both the four and nine-year cycles for a sharp rally into the 2022-2023 timeframe. In terms of price, that rally is likely to be the in the range of 70-100% off of whatever low that forms with these waves - before setting up yet another peak-and-decline phase with the four-year wave into the 2023-2024 region.

Jim Curry

The Gold Wave Trader

http://goldwavetrader.com/

http://cyclewave.homestead.com/

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