Cycle Trading

Early in the day stocks had formed a daily swing low to signal a possible daily cycle low. But then stocks closed out the day printing a lower low to negate the swing low that formed earlier.

Printing the lower low extends the daily cycle out by another day, but it could help ease the parameters for forming a weekly swing low.

Stocks are in their timing band to form an intermediate cycle low. In order to do so, stocks need to form a weekly swing low. Last week – stocks dropped nearly 4% on the week, making it difficult to form a weekly swing low.

However, stocks breaking lower on Monday could help to ease the parameters for forming a weekly swing low.

Stocks broke lower on Monday, causing a lower weekly low to be formed here on week 38. However, stocks also printed another 510 million Buying on Weakness on Monday. Stocks have been clustering the Buying on Weakness days lately. Including the BOW from Monday, stocks have clustered over 2.6 billion in Buying on Weakness recently. This is the type of number associated with an intermediate cycle low.

Getting back to stocks making a lower weekly low and tying that in with the recent clustering of BOW. Now that stocks have formed a lower weekly low, should they begin to rally into Friday that will help to ease the parameters for forming a weekly swing low. And once a weekly swing low forms – that will signal a new intermediate cycle.

So, as we observed on Sunday, this is the time to be bullish.