Cycle Trading: Awaiting Leadership
|Stocks provided more evidence that day 45 hosted the daily cycle low.
Stocks printed their lowest point on day 45, placing them in their timing band for a daily cycle low. Stocks formed a swing low on Tuesday and delivered bullish follow through on Wednesday to signal a new daily cycle. On Thursday stocks closed above the 50 day MA, providing more confirmation that day 45 hosted the DCL. Stocks still need to close above the declining 10 day MA and turn it higher to confirm day 45 as the daily cycle low.
So while stocks are looking more and more like day 45 hosted the DCL, two of the leading sectors are currently lagging ...
The semiconductors has been one of the leading sectors. And while they formed a swing low on Tuesday, they closed down for the day on Thursday. And we need to note that the semi's are still contained by the 50 day MA.
The other sector that is currently lagging is the banks. They too are still contained by the 50 day MA.
Perhaps these 2 sectors are only temporarily lagging and will soon resume their leadership. What we need to keep in mind is that stocks are now 20 weeks into their intermediate cycle. And since stocks are in their timing band for their intermediate cycle low, perhaps this lack of leadership is foreshadowing the pending intermediate cycle decline. Which is something I plan to discuss further in the Weekend Report.
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