Cycle Trading

Stocks delivered another bearish signal on Tuesday.

Stocks were up on Tuesday, gaining .49% on the day and closing back above the 10 day MA. However, stocks also printed a huge 871 million selling on strength on Tuesday. That is a large SOS number, the type of number typically associated with an intermediate cycle decline.

And this is not the only SOS number that occurred during the current daily cycle.

When stocks printed their last DCL they also printed 523 million Selling on Strength. Then another SOS day happened on day 2. It is very unusual to begin a daily cycle with large SOS numbers, which is something that we discussed here and here. And then there were two more large SOS days prior to today.

Factor the number of SOS days for this daily cycle along with stocks being late in their timing band for an intermediate cycle decline all point to the impending intermediate cycle decline. And since stocks are late in their timing band for an intermediate cycle decline (week 25) it is likely that this daily cycle will usher in the intermediate cycle low. A failed daily cycle is needed for stocks to print an intermediate cycle low. Stocks will need to break below the previous daily cycle low of 2691.99 in order to form a failed daily cycle.