Stocks broke lower on Monday.

Monday was day 36 for the daily equity cycle, placing stocks in their timing band for a daily cycle low. The peak on day 33 assures us of a right translated daily cycle formation, giving us the expectation for stocks to print a higher daily cycle low. So if stocks form a daily swing low, it will have good odds of marking the daily cycle low.

Two things that I am paying attention to is the RSI and the TSI. The RSI is oversold. When stocks are in the advancing stage of their intermediate cycle then RSI does not stay oversold for long, as witnessed in early December. So a quick rebound of the RSI will indicate a continuation of the intermediate cycle advance. But the bearish TSI divergence is a concern. If RSI does not recover quickly that will point to stocks beginning their intermediate cycle decline. Which is something that I plan to discuss in the Mid-Week Update.

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