We discussed that the trend line break last Tuesday signaled that stocks were beginning their daily cycle decline.
Stocks have been volatile since last Tuesday as they worked lower. Stocks closed at their lowest point on Thursday since the day 21 peak. Thursday was day 33, which places stocks in their timing band for a daily cycle low. Stocks will need to break below the day 29 low of 2405.70 in order to complete their daily cycle decline.
Due to the status of the intermediate cycle stocks are at risk for forming a failed daily cycle in order to complete their intermediate cycle decline. (I plan to cover the intermediate equity cycle in the Weekend Report.) While stocks could continue lower I want to point out that the last two times stocks closed below the 50 day MA they recovered quickly and continued to rally. Which may happen here.
I suspect that if stocks break below the day 29 low we could see a quick reversal. If that happens then a swing low could mark the daily cycle low. Then a break of the declining trend line would confirm a new daily cycle.