Failed Daily Cycle

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Stocks broke below their previous daily cycle low on Thursday, forming a failed daily cycle.

spx daily

Thursday was day 23 for the daily equity cycle. That leaves stocks 7 days shy of entering its timing band for a daily cycle low. And now that the technical level of support from the previous daily cycle low was broken, we should see 7 to 10 days of panic selling before stocks print their final daily cycle low.

Instead stocks closed just off their highs for the day forming a bullish reversal. That eases the parameters for forming a daily swing low. Since the last daily cycle was a bit extended at 53 days it is reasonable to see a slightly shortened daily cycle to follow, which would balance out the daily cycle counts. A daily swing low and a break of the declining trend line would be necessary to confirm a new daily cycle.

So if stocks do form an early daily cycle low, let’s look to see what happens to the weekly cycle.

spx weekly

The intermediate equity cycle peaked on week 7, formed a weekly swing high and then began its weekly cycle decline. A peak on week 7 sets up as a left translated cycle formation. So if a new daily cycle did begin this week it is too early too see an intermediate cycle low form here. So one more daily cycle would be needed to usher in the intermediate cycle decline.

So it makes me wonder if someone saved the markets today …

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