The daily equity peaked on Friday, day 36. It formed a daily swing high on Monday, signaling a daily cycle decline. Stocks delivered more bearish follow through today, dropping more the 1.6%. While stocks were due for a daily cycle decline, something more sinister may be afoot.
While stocks may have printed a total of 2.34 billion in Buying on Weakness during this daily cycle, they printed an even bigger 4.37 billion in Selling on Strength this cycle. The 4.37 billion is an unprecedented amount that I detailed here. In short, the huge SOS indicates an intermediate decline is near.
The weekly equity cycle peaked on week 7 and printed a clear and convincing swing high this week. While stocks are still near all-time highs the weekly True Strength Indicator is forming a bearish divergence which signals a change in trend.
The day 36 peak has locked in a right translated nature to this daily cycle. Meaning we are expecting that stocks print a higher low. The huge SOS numbers and bearish divergence on the weekly TSI is signaling that the next daily cycle will be at risk to form in a left translated manner, leading to an intermediate cycle decline.