Cycle Trading: Stocks Break Lower
|We discussed on Monday that stocks printed a swing low, possibly forming a very mild DCL.
That all changed on Thursday.
Stocks never did break above the day 26 peak. Then stocks broke decisively lower on Thursday, breaking below the day 29 low. Stocks also closed below the 10 day MA, turning it lower. This combined with the fact that the Nasdaq, the Russell and the Transports all printed lower lows on Thursday indicates that today was day 35 for the daily equity cycle.
However, stocks began to recover into the close, leaving behind a long lower shadow. That suggests to me Fed intervention, preventing any bearish momentum from developing. Stocks have been in a daily uptrend. Since stocks have not closed below the lower daily cycle band they remain in their daily uptrend. So if a swing low forms above the lower daily cycle band that would trigger a cycle band buy signal.
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