Stocks Ready To Cross The Line

At 35 days and printing a bearish reversal on Monday, stocks should be seeking out their DCL.

Instead stocks printed a bullish reversal on Tuesday then formed a swing low on Wednesday. Notice that the 10 day MA is beginning to turn higher. This is looking more and more like this maybe all the correction we will see. Stocks are currently in a daily uptrend. A close above the day 24 high of 4718.50 will indicate a continuation of the daily uptrend and trigger a cycle band buy signal. Stops could then adjusted to 4718.50.

Stocks Print Bullish Reversal

Stocks printed a bullish reversal on Tuesday.

Tuesday was day 6 for the daily equity cycle, placing stocks in their timing band for a daily cycle low. Monday’s bearish reversal, in real time, looked as if stocks were declining into their daily cycle low. However, Tuesday’s bullish reversal calls that into question.

With the unprecedented flood of global liquidity along with stocks entering the most bullish time of the year, this maybe all the correction we will see. Stocks are currently in a daily uptrend. A close above the day 24 high of 4718.50 will indicate a continuation of the daily uptrend and trigger a cycle band buy signal. Stops could then adjusted to 4718.50.

Waiting For Stocks To Cross The Line

The Dow Jones Industrial is seeking out its DCL.

The Dow broke below the daily cycle trend line, turned the 10 day MA lower, and is in its timing band for a daily cycle low. And Thursday’s bullish reversal eases the parameters for forming a daily swing low. A swing low and break above the declining trend line will signal a new daily cycle.

It’s questionable if day 27 represents a DCL for the Nasdaq. However, the tech heavy Nasdaq is breaking out to new highs. The Nasdaq is currently in a daily uptrend. Breaking out to a new high signals a continuation of the daily uptrend and triggers a cycle band buy signal.

The broader S & P has been consolidating for almost the past 2 weeks. A break below the day 27 low of 4630.66 should see stocks complete their daily cycle decline. But with the Nasdaq breaking out to new highs, it is possible for the S & P to follow. A break above the day 27 high of 4718.50 will shift the odds of stocks entering a melt-up phase and stops should then be raised to the new breakout level.

Potential Miner Buy Signal

The Miners formed a bullish reversal on Monday.

Monday was day 23 for the daily Miner cycle. That places the Miners in the early part of their timing band for a daily cycle low. The Miners retraced to the 50% fib level then formed a bullish reversal off support from the 50 day MA. That eases the parameters for forming a daily swing low. A break aboveh 32.01 will form a swing low. The Miners are in a daily uptrend. If they form a swing low above the lower daily cycle band then they will remain in their daily uptrend and trigger a cycle band buy signal.

Bullish Reversal

Stocks formed a bullish reversal on Friday.

Stocks broke below the day 21 low on Friday to extend their daily cycle decline. Friday was day 30, placing stocks in their timing band for a DCL. Friday’s bullish reversal eases the parameters for forming a swing low. A break above 4375.19 will form a swing low. Then a close above the 10 day MA will signal the new daily cycle. Stocks are in a daily downtrend. They will remain in their daily downtrend unless they can close back above the upper daily cycle band.  

In the Weekend Report I discuss why I expect this to be not only a daily cycle low, but an intermediate cycle low as well. And what I am looking for to signal a final melt-up phase to this bull run.

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Stocks Deliver Bearish Follow Through

We discussed on Tuesday how stocks lost the 10 day MA. Stocks delivered bearish follow through on Thursday.

Thursday was day 29 for the daily equity cycle, placing stocks in the early part of the their timing band for a daily cycle low. Stocks should break below the day 21 low of 4305.91 in order to complete their daly cycle decline. There are bullish divergences developing on the oscillators that often precede a cycle low. There is a chance that stocks will break below the day 21 low and form a bullish reversal, which would ease the parameters for forming a swing low. Still, we should wait for a swing low to signal the new daily cycle. In the Weekend Report I plan to discuss how stocks are also seeking out their intermediate cycle low.

Stocks Ready To Rally?

Stocks formed a swing low on Wednesday and printed a bullish reversal on Thursday. The previous 2 times that stocks tested the 50 day MA, dip buyers were rewarded with a continued rally.

Stocks printed their lowest point on Tuesday, day 17, which is too early for a DCL. But if stocks can close back above the 10 day MA then we will label day 17 as the half cycle low. Stocks are currently in a daily uptrend. Forming a swing low above the lower daily cycle band signals the continuation of the daily uptrend and triggers a cycle band buy signal, with the stop being a close below the 50 day MA.

Change Of Character

The advancing phase of the intermediate cycle is characterized by RSI 05 embedding in overbought and delivering quick bullish reversals once oversold. Stocks on Tuesday are beginning to show a change of character.

Instead of a quick bullish reversal, RSI 05 once again became oversold and is beginning to embed there. The previous 2 times that stocks tested the 50 day MA, dip buyers were rewarded with a continued rally. Stocks are still in a daily uptrend. If stocks form a swing low above the lower daily cycle band then they will remain in their daily uptrend and trigger a cycle band buy signal. However, a close below the 50 day MA would be another change in character that would signal the daily and intermediate cycle decline.

Daily Uptrend

Stocks formed a swing low on Friday then closed  above the 10 day MA on Monday to signal the new daily cycle. 

Stocks are now 25 weeks into their intermediate cycle, which means that they are in their timing band for an intermediate cycle decline. So we need to watch for signs that stocks are continuing their intermediate cycle advance. If RSI 05 becomes embedded again in overbought that would signal a continuation of the intermediate cycle advance. A quick bearish reversal would indicate a more suspicious outlook.

Buy The Dip

Stocks formed a bullish reversal on Thursday.

Stocks printed their lowest point on Thursday, following the day 40 peak. Thursday was day 43, placing stocks in their timing and for a DCL. Thursday’s bullish reversal eases the parameters for forming a swing low. A break above 4418.61 will form a swing low. Then a close back above the 10 day MA will signal a new daily cycle. Stocks are currently in a daily uptrend. If stocks form a swing low above the lower daily cycle band then they will remain in their daily uptrend and trigger a cycle band buy signal.