Stocks Consolidate Below 6900 — Left-Translated Daily Cycle a Growing Risk

Summary

Stocks continue to consolidate below 6900 resistance
Daily trend remains up, but momentum has weakened
Close below the 10 day moving average raises left-translation risk
50 day moving average is the key downside level to monitor
Daily structure now has implications for the intermediate cycle

Stocks continue to consolidate below the 6900 resistance level, with price essentially moving sideways as the market digests the recent advance. With stocks still in a daily uptrend, a bullish breakout from consolidation would indicate a continuation of the daily uptrend and signal a cycle band buy signal.

However, the technical picture has become more nuanced. Stocks closed below the 10 day moving average on Friday, which shifts the short-term risk profile. The current peak on day 9 places the daily cycle in a position where a left-translated daily cycle formation is now a growing risk.

If stocks were to break bearishly out of consolidation with a close below the 50 day moving average, that would signal the daily cycle decline. A move of that nature would also have broader implications, as it would force a reassessment of the intermediate cycle structure. I break down those weekly cycle implications in detail in The Weekend Report.

At the same time, it’s important to keep the larger trend in perspective. Stocks remain in a weekly uptrend and will continue to do so unless they close below the lower weekly cycle band. Until that happens, this consolidation remains a decision point rather than a confirmed trend change.

Cycle Trading