Intermediate Gravitational Pull

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Stocks are now in week 21 for their intermediate cycle. Which places them right in the heart of their timing band to seek out an intermediate cycle low.

weekly spx

We can see that the intermediate cycle has peaked on week 19. A weekly swing high formed on week 20. There is also a bearish divergence developing on the weekly TSI. In order for stocks to experience an intermediate cycle decline, stocks will need break below the intermediate trend line and also print a failed daily cycle. Failed daily cycles typically peak on or before day 20.

spx daily

The current daily equity cycle sports a day 16 peak. A swing high formed the next day. Stocks have been in decline since. While it is possible that stocks are in the process of forming a half cycle low, I believe that stocks are feeling the gravitaional pull of the impending intermediate cycle low.

The daily TSI has also delivered a signal that stocks have entered an intermediate cycle decline, which we will see below.

spx daily trend line

Notice that the TSI has printed a TSI trend line break. A TSI trend line break is a reliable signal of an intermediate cycle decline. An intermediate cycle decline should see stocks break below the previous daily cycle low of 1980.90.

There is an alternative scenario for stocks. It is possible for stocks to find support at the (dashed) intermediate trend line by Friday. Friday would take stocks to day 28, which is only two days shy of its normal timing band. So if stocks manage to find support at the (dashed) intermediate trend line and rally then there is a possibility for this intermediate cycle to be stretch 6 – 8 more weeks to allow for one more daily cycle.

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