Still Waiting …

On Monday we discussed that we were waiting on a close above the 4720 resistance level to add to positions. We are still waiting.

Stocks had gapped up over the 10 day MA last week during the initial surge out of its DCL. Stocks retraced a bit on Tuesday, backfilling that gap.

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. A close above 4660.47 will form a daily swing low. The plan remains the same. Add on a close above resistance and use a close below the rising 50 day MA as the stop.

Boom Goes The Dynamite

While stocks formed a swing low on on Monday, they were contained by the 10 day MA.

Boom.

Stocks gapped above the declining trend line to end up rallying for 2.07% on Tuesday to signal the new daily cycle. Stocks also closed above the upper daily cycle band on Tuesday. Closing above the upper daily cycle band ends the daily downtrend and renews the daily uptrend.

Stocks are heading into the most bullish time of the year. If stocks can quickly breakout above the all-time high of 4743.83, that could trigger a melt-up phase.

Stocks Recover The 50 Day MA — Again

Stocks are going through a volatile bottoming phase.

Stocks lost the 50 day MA on Wednesday, regained it on Thursday, lost it again on Friday and then regained it again on Monday. Stocks also formed a swing low on Monday. With stocks are in their timing band for a DCL, a close above the 10 day MA will signal a new daily cycle.

Stocks are heading into the most bullish time of the year. If stocks can quickly breakout above the all-time high of 4743.83, that could trigger a melt-up phase.

Gold – Triple Convergence

Gold formed a swing low on Friday.

Gold printed its lowest point on Thursday, day 44, placing it late in its timing band for a DCL.  Gold formed a swing low on Friday. A close above triple convergence of the 200 day MA, the 50 day MA, and 10 day MA will have us label day 44 as the DCL. Gold is currently in a daily downtrend. Gold will remain in its daily downtrend unless it closes above the upper daily cycle band.

Stock Recover The 50 Day MA

Stocks recovered the 50 day MA on Thursday.

Stocks broke below the September breakout level on Wednesday to close below the 50 day MA. Stocks then broke lower on Thursday to print a bullish reversal. Thursday was day 42, placing stocks in their timing band for a DCL.  Technically stocks still need to form a swing low. However, recovery of the September breakout level and the rising 50 day MA signals a new daily cycle. 

Stocks are heading into the most bullish time of the year. If stocks can deliver bullish follow through on recovering previous breakout level and the 50 day MA, that 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.

Oil Game Changer

Oil dropped over 13% on Friday to extend its daily cycle decline.

Oil printed its lowest point on Friday, day 67, placing oil very deep in its timing band for a DCL. At this late stage of the daily cycle, a swing low and close back above the 200 day MA will have good odds of marking the DCL.

 So, while oil could potentially begin a new daily cycle next week, Friday’s huge drop is a game changer that will likely send oil into an intermediate and yearly cycle decline. Which I further discuss in the Weekend Report.

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.

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.

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.