Stocks formed a swing low and closed above the 10 day MA on Wednesday, confirming an early day 22 daily cycle low.
However, stocks failed to deliver bullish follow-through.
Instead, stocks formed a swing high on Thursday and closed below both the 10 day MA and 50 day MA. This indicates a continuation of the daily downtrend and triggered a Cycle Band sell signal.
The bearish reversal reinforces the concerns discussed in Monday’s Stocks — Potential Change in Character.
The day 22 low at 7631.77 is now an important level to watch. A break below that level would challenge the early DCL interpretation.
The bearish developments are also manifesting on the weekly chart. I plan to break down what this means for the intermediate cycle in The Weekend Report.
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