A swing low is required to form a daily cycle low. And stocks did form a swing low on Wednesday. While it is possible to print an early daily cycle low, Wednesday’s large 593 million Selling on Strength indicates more volatility.
Stocks have already lost both the 200 DMA and the 10 DMA. Now the 10 DMA is turning lower, which is another check box for stocks being in their daily cycle decline. Both the transports and the banks also turned their 10 10 DMA’s lower to signal daily cycle declines. Neither the transports nor the banks formed swing lows, and in fact, the banks printed a lower low. So with Wednesday being day 17 for the daily equity cycle, it appears that stocks are feeling the gravitational pull of the pending daily cycle low.
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