Stocks printed another 248 million Selling on Strength on Tuesday.
Tuesday was day 27 for the daily equity cycle, placing stocks 3 days shy of its timing band for a daily cycle low. We discussed on Saturday how the Selling n Strength numbers have really been adding up. There was already 2.3 billion SOS prior to last Friday. And since then an additional 833 million Selling on Strength has occurred bringing the total to over 3.2 billion. So while SOS is not a precise timing instrument, the accumulation of SOS is becoming significant.
Smart money has been selling into strength in anticipation of a cycle decline. A likely trigger for the pending cycle decline is the FOMC meeting. It is expected that the Fed will increase its policy rate to 1.75 to 2.0 percent. With stocks being close to their timing band for a daily cycle low combined with the huge SOS numbers makes it likely that we will see a “sell the news” scenario sending stocks into their pending cycle decline.