Cycle Trading: Stocks Still Seeking A Bottom
|After the waterfall decline from last week, stocks are still seeking out their daily cycle low.
Stocks printed their lowest point on Thursday, day 40, placing them in their timing band for a DCL. So if a swing low forms, it would signal a DCL. However, I think that stocks are still seeking out its DCL.
The first reason is the 764 million Selling on Strength number that printed on Friday. If Thursday was the DCL then stocks should not be printing such a huge SOS number so soon afterwards.
The second reason is that stocks lost the 200 day MA (again) on Monday. I think that losing the 200 day MA on Monday sets stocks up for an undercut of the day 40 low. That should get everybody bearish and on side of the wrong side of the boat. So once the DCL low forms, bulls will be to afraid to pull the trigger setting up stocks to continue to rally into a wall of worry.
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