Stocks broke lower on Tuesday to form a daily swing high.
Tuesday was day 8 for the daily equity cycle. Despite forming a swing high, stocks delivered a bullish signal on Tuesday.
Stocks printed 950 million Buying on Weakness on Tuesday. That is a huge BOW number, the type normally seen during an intermediate cycle decline. Usually these large BOW numbers are bullish indicators for stocks. Notice the large BOW number that printed on May 2nd right before the cycle bottomed.
Stocks were getting a bit stretched above the 10 day MA. Factoring in the large BOW number it appears that Tuesday’s swing high will allow price to catch up to the 10 day MA. Stocks have begun to close above the upper daily cycle band, indicating that stocks have begun a daily uptrend. So if stocks can form a swing low above the lower daily cycle band they will remain in their daily uptrend.