Stocks closed below the 50 day MA on Monday. If stocks deliver any bearish follow through that would indicate a continuation of the daily cycle decline. A break below 3694.12 would form a failed daily cycle.
There are 3 things that I am looking for to signal that the correction is over.
First – Stocks need to recover the 50 day MA and go on to close above the 10 day MA. Doing so will have us label day 23 as an early DCL. The previous DCL was stretched at 61 days. Often times cycles will follow a stretched cycle with a shortened cycle — which balances out the cycle counts.
Second- Stocks need to deliver bullish follow through and break above the declining trend line. Breaking above the declining trend line will indicate that day 23 was the DCL.
Third –Stocks need to form a weekly swing low. Week 23 placed stocks in their timing band for an intermediate cycle low. A break above 3914.50 will form a weekly swing low. Stocks are in a strong weekly uptrend. If a weekly swing low forms then stocks will remain in their weekly uptrend and trigger a weekly cycle band buy signal.