Stocks Form A Daily Swing High

October 14, 2020

Stocks formed a daily swing high on Wednesday.

Stocks peaked on Monday, day 12. They closed lower on Tuesday and once again on Wednesday, forming a daily swing high. Stocks did get stretched above the 10 day MA and this may simply be stocks declining into a half cycle low which will allow for the 10 day MA to catch up to price. But there could be another explanation.

Stocks have been forming this megaphone topping pattern. Resistance from the upper stem could be sending stocks lower. A possible strategy is to exit based on the swing high. If this turns out to be a half cycle decline and then one could reenter on a swing low. This would protect any gains from a deeper sell off. But if stocks deliver a bullish surprise and close above the upper stem, then long positions can be reentered using the upper stem as the stop.

2 responses to “Stocks Form A Daily Swing High”

Alex

October 15, 2020

Isnt it more likely that stocks are in IC decline considering that the recent bounce was entailed solely by dollar’s DC decline while now the dollar is up in a new DC maybe en route towards its 200dma until after Nov 3? Also consider the heavily bearish COT report on the euro.

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1. likesmoneystudies
  
  October 15, 2020
  
  The first daily cycle in a new intermediate cycle should right translated, therefore my expectation is a half cycle decline. If stocks are rolling over into an IC decline that would mean this is week 29, which is possible. I will plan to discuss this further in the Weekend Report.
  
  LM
  
  Reply

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