Intermediate Cycle Decline

September 21, 2020

Stocks continued lower on Monday.

Stocks undercut the day 62 low on Friday to extend its daily cycle decline. Stocks delivered bearish follow through on Monday by closing below the lower daily cycle band. Closing below the lower daily cycle band ends the daily uptrend and begins a daily downtrend. It also signals the intermediate cycle decline.

This is week 26 for the intermediate equity cycle. That places stocks deep in their timing band for an intermediate cycle low. Stocks are also very deep in its timing band for a daily cycle low. So once stocks print their DCL, it has good odds of also marking the ICL. A swing low and close back above the declining trend line will signal the daily cycle low.

3 responses to “Intermediate Cycle Decline”

Koen

September 21, 2020

Dear,

Would you exspect one next failed daily cycle since uptrend is stopped or not because you mention that also deep in the weekly cycle?

Best regards

Reply
1. likesmoneystudies
  
  September 22, 2020
  
  In Cycle theory a failed daily cycle is needed for an intermediate cycle decline.
  So, in theory, we are looking for a failed daily cycle before the ICL forms. However, in theory, we do not have the Fed flooding the markets with historic amounts of liquidity.
  
  But stocks are deep in their timing band for their ICL. There is a weekly swing high, and a close below the 10 week MA. And there is a break below the weekly trend line. The weekly charts are checking all of the boxes for an ICL.
  
  I suspect that once this DCL forms, it will also mark the ICL. So one of the things I will be watching once the DCL forms, if stocks can close back above the upper daily cycle band. Closing back above the upper daily cycle band would begin a new daily uptrend and signal that the intermediate cycle low has been set.
  
  Reply
  1. Koen
    
    September 22, 2020
    
    Thanks!

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