Daily Equity Cycle Update

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Stocks broke convincingly below the 10 day MA on Tuesday which signaled that stocks were extending their daily cycle decline.

The reasons we discussed on Tuesday that stocks ere extending their daily cycle decline included:
1) The peak on day 40 locks in a right translated cycle.
2) No trend line break.
3) No real panic (until Tuesday)

spx

Stocks printed a lower low on Wednesday and has formed a daily swing low on Thursday. While stocks are getting late in their timing band for a daily cycle low, I am not convinced that the swing low that formed on Thursday completes the daily cycle decline. I still would like to see a clear and convincing break of the (black) daily cycle trend line before being satisfied that the daily cycle low is in. However if stocks go on to rally from here and break above the declining (blue dashed) trend line then that would signal that Wednesday hosted the daily cycle low.

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2 thoughts on “Daily Equity Cycle Update

  1. What about the huge BOW for SPY – something worth noting that a trend line break may not come

    Sent from my iPhone

    • There was a large BOW for SPY.
      That is the type of number we start to see as we approach an ICL …
      The BOW (and the SOS) are signals but not necessarily precise timing tools.
      The could be several more BOW’s as stocks go lower.

      However, the the daily cycle low may have printed on Wednesday.
      If that is the case a break above the declining trend line for confirms the new daily cycle. For those that do not want to wait for confirmation, a stop below Wednesday’s low provides a low risk entry.

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