Cycle Trading

Stocks formed a daily swing low on Monday.

Stocks printed their lowest point on Friday, day 18, which is too early to expect the DCL to form. Stocks should trend lower for another 10 to 15 days to be in their timing band for a DCL. Stocks are likely to find resistance at the converging 10 day MA and 200 day MA and break lower to complete the daily cycle decline.

However, the Joker in the deck is Fed Chairman Jerome Powell speaking on Wednesday regarding the Fed’s decision on interest rates. While it is widely expected that rates will remain the same, it will be his comments that could impact the Market.

If stocks react bullishly to Powell’s comments and close above the converging 200 day MA and 10 day MA that woulda game changer. That would indicate that Friday was the DCL. Which would make Monday day 1 of the new daily cycle — and then Wednesday would be day 3.