Cycle trading: Stocks form a swing low
|Stocks formed a daily swing low on Tuesday.
Stocks printed their lowest point on Monday, day 35, which places stocks in its timing band for a daily cycle low. Stocks have formed some swing lows prior to Tuesday but delivered no bullish follow through. We will need to see a close above the 10 day MA in order to label day 35 as the daily cycle low.
However, there are some key sectors signaling that the daily cycle low is formed.
The Financials formed a convincing swing low on Tuesday, but we still need to see a close above the 10 day MA.
In the charts below you will see that both the Transports and the Semiconductor's not only formed swing lows, but also closed convincingly above the 10 day MA.
So it looks like stocks have put in their daily cycle low. Stocks are also in their timing band for their intermediate and yearly cycle lows. (In the Weekend Report I plan to detail the status of intermediate and yearly cycles). So let's say that Monday was the daily cycle low. Due to the exponential nature of the Coronavirus, we will need 2 to 3 more weeks before we can say with any confidence that the intermediate and yearly cycle lows have also formed. If the rate of new cases in the US slows, then that would make it likely that the DCL will also mark the ICL and the YCL. But if the number of cases accelerates, then that will certainly extend the intermediate and yearly cycle declines.
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