When stocks dropped almost 6% on June 11th to close below the 200 day MA it looked as if stocks were well on their way to an intermediate cycle decline. Stocks regained the 200 DMA on the 12th and printed a bullish reversal on the 15th, which was day 21. Since 21 days was too early for a daily cycle low we noted that it appeared that the Fed was able to dodge a bullet by preventing stocks from crashing into an intermediate cycle low.
The rally out of the day 21 low was short lived as stocks lost the 200 day MA again on Friday. If stocks were able to deliver bearish follow through on Monday, the 50 day MA could have been lost sending stocks into an intermediate cycle decline. Instead, the 200 day MA was successfully defended on Monday. Stocks delivered bullish follow through on Tuesday by forming a swing low and closing above the 10 day MA. If stocks can close above the declining trend line then we would recognize that stocks have begun a new daily cycle.
And if they do close above the declining trend line, it would look like the Fed managed to dodge another bullet.