Stocks dropped over 4% on Monday. Stocks recovered on Tuesday gaining back over 40% of Monday’s drop to form a huge bullish reversal. This sets up a potential bottom.
Tuesday was day 54 for the daily equity cycle. That places stocks late in their timing band for a daily cycle low. Tuesday’s huge bullish reversal eases the parameters for forming a swing low. A break above 2701.04 will form a swing low to signal a new daily cycle. The large Selling on Strength number to printed on Tuesday indicates near term volatility due to still needing to exhaust the selling pressure. We will use a close above the declining 10 day MA as confirmation of the new daily cycle.
Cycle Trading 
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