Conflicting Signals

January 1, 2019

The evidence continues to accumulate indicating that stocks have formed their daily cycle low.

Stocks formed a swing low last week and followed up on Monday by closing above both the 10 day MA and the declining trend line to signal a new daily cycle.

The Dow, the Russell, the Nasdaq and the Transports all followed suit. While stocks still need to turn the 10 day MA higher, it looks more and more like stocks have printed their DCL.

However stocks have delivered some conflicting signals.

On Thursday, 12/26. stocks printed a huge SOS number

And once again on Monday, 12/31

Stocks should not be printing large Selling on Strength days once they formed their final DCL of the intermediate cycle. Not only are stocks printing large SOS days as they emerge from their cycle low, these are the kind of numbers associated with a decline into a multi year cycle low. The last time we saw these type of SOS numbers was at the last DCL.

As stocks emerged from the last DCL they printed similar SOS numbers. Which lead to a volatile stretch that ended with a bloodbath decline into the 12/26/18 low. Even if 12/26 was not only the daily cycle low but the intermediate cycle low these large SOS numbers indicate more volatility and perhaps a retest of the recent low.

2 responses to “Conflicting Signals”

jdg

January 1, 2019

I think Christmas eve may be the bottom but it won’t be a V shape recovery. Cpc and cpce were ultra low too signaling content.

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George

January 3, 2019

Thanks for your emails.

Since the last few months I follow you by emails, thank-you so much.

I’ve one question for you, in the last chart of this email you see the SOS of 2739 in total. How can you see (say as today the selling continue) if those numbers are to 0000 ? I mean it’s gone? Please let me know Sir.

Thanks a lot.

Geurt Hoekman

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