Cycle Trading

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The SPY printed an eye popping number today.

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One Billion six hundred fifty seven million Selling on Strength printed today. This is a huge number. This is the type of number that we would expect nearing an intermediate cycle top. While we acknowledge that the SOS number is not a precise timing tool, this is hard to ignore. Now combined with the three hundred five million Selling on Strength that printed on Wednesday and the 346 million from 10/30 brings this total to over 2 billion in Selling on Strength.

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The previous daily cycle set a new all time high on day 30, before declining into an intermediate cycle low. Then the 345 SOS day printed approaching the previous high. The SPY next printed a 305 SOS on the day it first closed above the previous daily cycle high, which was Wednesday. Now today as technicians chase the breakout the SPY prints the 1.6 billion SOS.

We discussed yesterday that we expect this first daily cycle to form as a right translated cycle. The 2 billion SOS already printed means we should keep an open mind to the possibility of this cycle failing.

The Miners also had a huge SOS day today.

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GDX printed a big 399 million SOS today. Now the Miners are in their timing band to print a daily cycle low. Wednesday was the lowest point since the daily cycle peaked on day 1. The Miners did form a swing low today. The weak close combined with the big SOS number does suggest that the Miners need to make one more push lower. What we do know is that once the Miners breach the (blue) declining trend line that will confirm a new daily cycle.