Cycle Trading

Stocks have formed a swing low in overnight trading.

Stocks printed their lowest point on Thursday following the day 28 peak. Thursday was day 39, placing stocks in their timing band for a daily cycle low. Therefore the swing low the formed in overnight trading has good odds of beginning the new daily cycle.

However stocks delivered a clear warning signal for this new daily cycle.

Stocks printed 523 million Selling on Strength on Thursday. We typically Selling on Strength numbers nearing cycle peaks, not cycle bottoms. Seeing this large SOS number on what potentially is the DCL is a warning signal which aligns with our intermediate cycle framework that stocks are declining into an intermediate cycle low. Stocks still need to complete their intermediate cycle decline (which I will detail in the Weekend Report). Therefore our expectation is to see a left translated daily cycle formation which will allow stocks to complete their intermediate cycle decline.