Stocks continued lower on Tuesday.
Stocks typically print a daily cycle low every 35 to 45 days. So at 69 days, stocks are overdue for a daily cycle low. Tuesday’s narrow range day eases the parameters for forming a swing low. A break above 5079.84 will form a swing low. Then a close above the 10 day MA will signal the new daily cycle. I plan to discuss in the Weekend Report what stocks need to do to convince me that the pending rally is not going to be a Dead Cat Bounce.
Stocks closed lower again on Monday.
Stocks are getting stretched below the 10 day MA and approaching a possible support level at the June DCL. We could see stocks deliver a dead cat bounce, which will help to allow the 10 day MA to catch up to price. With stocks needing another 3 – 4 weeks to be in their timing band for a DCL, any bounce will likely set the declining trend line. Stocks are currently in a daily downtrend. They will remain in their daily downtrend unless they close back above the upper daily cycle band.
Cycle Trading 