Stocks were down close to 23 points early on Thursday before recovering some into the close. In order to consider the bigger implications we will begin with the weekly chart before breaking down the daily chart.
This is week 38 for the intermediate equity cycle. The new high on week 38 assures us of a right translated weekly cycle formation. Since this is very late for an intermediate cycle decline, I believe that once stocks deliver a correction it will be brief.
And that correction may have began on Thursday …
Thursday was day 19 for the daily equity cycle. The a new high on day 19 begins to shift the odds towards a right translated cycle formation. However the previous cycle low is less than 3% away. So if this is the start of the daily cycle decline then a failed daily cycle is certainly a possibility. A break below the previous daily cycle low of 2405.70 would form a failed daily cycle and that would confirm that the intermediate cycle is in decline. Of course in order for the daily cycle decline to begin, stocks need to form a daily swing high. A break below Thursday’s low of 2459.93 would form a daily swing high.
Stocks need to form a weekly swing high in order to begin their intermediate decline. Since stocks printed a new weekly high this week, the earliest a weekly swing high can form would ben next week. Normally intermediate declines run at least 3 to 6 weeks. But as mentioned, since this intermediate cycle is so extended I think that the intermediate decline will be brief. Stocks would need to break below 2405.70 in order to complete their intermediate cycle decline.