Cycle Trading

Stocks delivered another bearish signal on Monday.

Monday was day 26 for the daily equity cycle. The new high on day 26 assures us of a right translated daily cycle formation. But stocks printed a huge 822 million Selling on Strength on Monday.

The 822 million Selling on Strength by itself is a concern. But the bigger picture is that the SOS days are beginning to cluster. And the clustering is near the timing band for not only a daily cycle low, but the intermediate cycle low as well. And this is why I think we need to be cautious. Dispite the right translated daily cycle formation, the gravitational pull of the impending intermediate cycle decline can potentially cause a failed daily cycle here.