Seeking A Bottom

Stocks are seeking out their DCL.

Stocks have already retraced back below the 38% fib level. At 40 days, stocks are right in the heart of their timing band for a DCL. Stocks are approaching possible support from the converging previous breakout level and the rising 50 day MA. With stocks 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.

And a successful backtest of the previous breakout level as stocks head into the most bullish time of the year could trigger a melt-up phase.

Bullish Signal

Stocks delivered a bullish signal on Monday.

Stocks formed a bullish RSI reversal on Monday.

Stocks have been in a daily uptrend that has been characterized by highs occurring above the upper daily cycle band and lower forming above the lower daily cycle band. Another characteristic is having RSI become embedded in overbought. Monday’s quick bullish RSI reversal is a signal that stocks will resume their daily uptrend. Stocks did form a swing low on Monday. A close above the 10 day MA will indicate a continuation of the daily uptrend and trigger a cycle band buy signal.

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 Form A Swing High

Stocks formed a swing high on Tuesday.

Tuesday was day 26 for the daily equity cycle.  That places stocks 4 days shy of their timing band for a DCL. Any bearish follow through should send stocks into their daily cycle decline. A daily cycle decline would allow stocks to backtest the breakout level and allow sentiment to cool off. This would set stocks up to emerge from a DCL heading into the most bullish time of the year. Stocks are currently 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.

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.

Stocks Deliver Buy Signal

After breaking out to new all time highs on Tuesday, stocks backtested the breakout level on Wednesday.

After emerging from the ICL stocks have begun closing above the upper daily cycle band indicating that they are in a daily uptrend. Forming a swing low above the upper daily cycle band signals a continuation of the daily uptrend and triggers a cycle band buy signal.

The decline into the ICL has stretched the ‘elastic band’ lower. If stocks deliver bullish follow through on the backtest of the 4545.85 level then that could trigger a melt-up phase.

Buy Signal For Energy

XLE formed a daily swing low on Tuesday.

XLE broke below both the 50 day MA and the 10 day MA to print its lowest point on Monday, day 22, placing XLE in its timing band for a DCL. XLE is in a daily uptrend. Forming a swing low above the lower daily cycle band indicates a continuation of the daily uptrend. A close above the converging 50 day MA and 10 day MA will signal a new daily cycle and trigger a cycle band buy signal.

Intermediate Cycle Low

Stocks broke below the previous daily cycle low on Monday. Breaking below the previous daily cycle low forms a failed daily cycle and confirms the intermediate cycle decline.

Stocks are on week 29 for the intermediate cycle. This places them very deep in their timing band for an intermediate cycle low. The odds are very good that once a daily cycle low forms, that it will also mark the intermediate cycle low as well.

Stocks are currently in a weekly uptrend and are already in the process of forming a bullish weekly reversal. If stocks form a weekly swing low above the lower weekly cycle band then they will remain in their weekly uptrend and trigger a weekly cycle band buy signal.

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.