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 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.

Bearish Reversal

Stocks formed a bearish reversal on Monday.

Monday was day 35 for the daily equity cycle, placing stocks in their timing band for a daily cycle low. Monday’s bearish reversal eases the parameters for forming a daily swing high. A break below 4682.94 will form a swing high. Then a close below the 10 day MA will signal the daily cycle decline. Stocks should go on to break below the day 27 low in order to complete its daily cycle decline. Stocks are in a daily uptrend. Stocks will remain in their daily uptrend unless they close below the lower daily cycle band.

Stocks Waiting on Bullish Follow Through

While stocks formed a swing low on Friday, they did not deliver bullish follow through on Monday.

If stocks broke above he day 27 high of 4718.50, that would have shifted the odds of stocks entering a melt-up phase. However, stocks closed lower on the day. Monday was day 30 for the daily equity cycle, placing stocks in their timing band for a DCL.  Any bearish follow through should send stocks to complete their daily cycle decline. Stocks should break below the day 27 low of 4630.66 and turn the 10 day MA lower in order to complete its daily cycle decline. This would allow stocks to backtest the 4545.85 breakout level and allow sentiment to cool off. Which would set stocks up to emerge from a DCL heading into the most bullish time of the year. 

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.

Bullish Follow Through

Stocks have broken above the previous all all time highs.

Stocks are delivering bullish follow through on the breakout of the 4545.85 level which could trigger a melt-up phase. However, I suspect that a daily cycle decline will backtest the breakout level before the we see the melt-up phase.

Stocks are currently getting stretched above the 10 day MA. At 25 days, stocks are 5 days shy of their timing band for a DCL. A daily cycle decline would allow stocks to backtest the breakout level and allow sentiment to cool off. This would also allow stocks to emerge from a DCL heading into the most bullish time of the year.

The 11/06/21 Weekend Report Preview

The Dollar

At 23 weeks for the weekly cycle and 10 months for the yearly cycle, the dollar is late in both timing bands for an intermediate and yearly cycle decline.

The dollar printed a bearish reversal on Friday, day 6. A top on day 6 would set the dollar up for a left translated daily cycle formation. Then any bearish follow through could trigger the intermediate and yearly cycle decline. The dollar is currently, in a daily uptrend.  But a close below the lower daily cycle band will end the daily uptrend and begin  a daily downtrend.

Stocks

Stocks continued higher on this week.

The new high on day 24 locks in a right translated daily cycle formation. That aligns with stocks being in a daily uptrend. Stocks will remain in their daily uptrend unless they close below the lower daily cycle band. 

The decline into the ICL stretched the ‘elastic band’ lower. Stocks are delivering bullish follow through on the breakout of the 4545.85 level. This could trigger a melt-up phase. I suspect that a daily cycle decline will back test the breakout level before the we see the melt-up phase.

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Bullish Follow Through

Stocks continued higher on Tuesday.

Tuesday was day 21 for the daily equity cycle. The new high on day 21 shifts the odds towards a right translated daily cycle formation. That aligns with stocks being in a daily uptrend. Stocks will remain in their daily uptrend unless they close below the lower daily cycle band.

The decline into the ICL stretched the ‘elastic band’ lower. Stocks are delivering bullish follow through on the breakout of the 4545.85 level. This could trigger a melt-up phase.