Cycle Trading

Stocks printed their lowest point on Monday, day 52, placing them deep in their timing band to print a daily cycle low. Stocks need to form a swing low and close above the declining 10 day MA to signal a new daily cycle. The recent clustering of Buying on Weakness days to the sum of 2.6 billion indicates that an intermediate cycle low is near, and that day 52 could possibly have marked the DCL.

But the large Selling on Strength number that printed on Wednesday signaled more volatility for stocks.

Stocks delivered an impressive rally on Tuesday, gaining 1.57% on the day. However, stocks also printed 427 million Selling on Strength on Wednesday. Stocks do not typically print large SOS days as they emerge from a cycle low unless we are in store for a volatile bottoming process. And I suspect that will be the case until we get past next week elections.