Stocks daily cycle low is impending.

We’ve got enough of a decline at this point that I can say with conviction the markets are moving down into their daily cycle low. The runaway scenario is still on the table as long as the SPX doesn’t drop below 2015 before bottoming.

But make no mistake, this is only a profit taking event to cool off sentiment.

Remember, the time to buy is when you are scared. We are going to get a great buying opportunity any day now. Once the daily cycle low (DCL) is complete, the second daily cycle will test the all-time highs.

stocks daily cycle low

One or two days more down days and the RSI (5) will reach oversold.

As long as the correction isn’t larger that 60 points, the runaway scenario is still on the table.

Either way though, once the daily cycle low (DCL) is done, the market is going to test the all-time highs before the intermediate cycle tops.

The McClellan oscillator is getting to levels that should force the DCL and turn the market back up. One or two more down days should do the trick.

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  1. Joseph

    Gary, we brk 2030 as I stated we wd come Down Hard April 7……
    We’re going to 2000-1980….
    If we brk 2030 and stay Below there, then we go to 2012-2000
    Break this and we go to 1990…..
    That’s where I see where werw Going to the week into April 22, But will See… A BS news flash can change this….
    FRI I can’t see the big boys tk this down….
    I believe next week up into OPEx April 15….

    But I will be ready 3am EST to catch and down or UP surprise….
    BioTech Strong June,July, AUG
    Seasonality wise….

    1. Gary Post author

      April 22 is way too long for the DCL. It’s due any day and even with this meager little pullback sentiment is cooling off rapidly. One or two more down days and bullish sentiment will be back below 20% bulls. That’s what we need to fuel the next leg up.

  2. Don

    What if it does drop below 2015? Does that mean the ‘runaway’ move is nixed or just put on hold? just asking, not predicting anything.

    1. Gary Post author

      I prefer we don’t have a runaway. Cycles become useless in a runaway. It’s easier to trade if we get normal DCL’s right on schedule.

      So a move below 2015 would still just be a normal DCL and it would take the runaway bugaboo off the table.

  3. Don

    You say “either way once the DCL is done the market is going to make a test of the all time highs.” So, are you saying that there will be a test of all time highs when the DCL is finished but if the drop is more than 60 points, a runaway move is no longer likely?

    1. Gary Post author

      I’ll explain it this way. Retail traders assume that a deep correction is bad. It’s actually the opposite. Think of the market like a pendulum. The further it gets stretched in one direction the further it will snap back in the opposite once the selling pressure is exhausted. So a move below 2015, or even below 2000 isn’t a bad thing. It just creates a deeper oversold condition. And the deeper the oversold condition the more likely the market will rally hard enough to test the all-time highs during the second daily cycle.

      A deep DCL causes a lot of traders to get short because most traders don’t understand cycles. They end up getting short right at the bottom of the cycle low. And the more of those there are the more have to cover and go the other way once the next leg up begins.

      So while it seems counter intuitive, a deep DCL is not actually a bad thing for the market. It will create the fuel we need to make the test of the all-time highs during the next cycle. If the DCL can push the McClellen oscillator down to minus 80 or lower then I will guarantee we hit the all-time highs during the second daily cycle.

  4. Don

    I look at the charts, the low volume rally and the fact that almost all other stock markets are in clear cut bear markets and all I can conclude is that we will be taking out the lows of February fairly soon.

    1. MuffinTop

      Don — You’re already stressing me out! Pour yourself a glass of wine and flip the Tv on 🙂

      1. Jay

        …and sit back and wait for triple digit Gold and Single digit GDX by the first quarter of 2017 🙂

  5. Don

    I am over weight with inverse ETFs, (some 3X) so I suppose my outlook is biased somewhat. Perhaps I am seeing what I want to see.

    1. Bill

      Never never go all in …yes I too would be worried if I were you,but I’m much more conservative in my plays . I like a buffet plate if you will. A little bit of everything and wait for the money to come to me I don’t chase the money…and yes I am an option trade 90% of the time

  6. Joseph

    In A{PRIL, we come down 2nd week and on …
    WHY, ITS TAX Time…..Seasonality stats go waaaaay back
    if we get to 1990 or so, everyone is gonna say here comes 1800…. will bounce and go to 2080, then all will say will come down BUT they will take this
    JUST BELOW 2134…. Then Bunno Notte in Italian says Good Nite, Back Down
    FED Wont raise rates until NEW Prez is in
    Also, as stated, last 85 years, YES, 85 years, in presidential election 2nd term Prez, In April, market comes down and rises Mid MAY-June/July…..

    April 17 big oil mtg, if it goes sideways…..
    Week into April 22nd we test lows of April and Break

    1. Ralph Wiederzane

      I’m quite sure he’ll be right, and probably still in the game to benefit unlike yourself who gets his time frames mixed up. You make long term directional calls but can’t hold anything more than a day. Maybe you’ll figure that out some day, you don’t have to worry about what anybody here is doing, you need a tick trading site or start playing video games.

  7. Jonathan

    Hi Gary, Do the principles on gold miners and gold apply to silver? Does one have a great upside.

  8. Joseph

    Market FRI is UP, if it was gonna go dn they wd have kept in under 2030….not 2035….
    FRI is a UP day…..
    Will see at 3am EST

    1. Bill

      Steve has no cash, he is the only one I know that makes a trade yet never posts a chart….hes trading a fake account, hell my fake trial account was a cool million yesterday, lol

  9. Walt

    I’m still waiting in the US dollar . Lets see if it can finally break 95.0 to the upside . That might change the price of gold and stocks if it gets some traction . The dollar has been forgotten it seems. That could change everything if it gains steam , with disenchantment of all the debasing currencies around the world .

    1. RickyBobby

      S&P 1600

      No doubt about it. Then fed takes rate hikes off table and rally begins up to 1860. Then big decline and fed declares QE4

      Time stamp this.

  10. Peter

    If markets move according to expected time frames, why are they always fooling everyone. There’s no way we test new highs when earnings are worst now than 6 months ago and economic conditions are still deteriorating. Nobody is talking global economic recession. Greece paying their scheduled bill is like as good as Yankees winning last year World Series.

    1. RickyBobby

      Agree. CNBC’ers and muppets are about to get whipsawed to the downside. FED is still talking tuff about rate hikes – market will throw a tantrum soon

  11. Gary Post author

    With oil starting to rally convincingly out of its DCL it’s going to be tough for stocks to make much more headway lower. I’m guessing the DCL does hold above the 2015 level.

  12. Bill

    FED alert:

    It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at 11:30 AM on Monday, April 11, 2016, will be held under expedited procedures, as set forth in section 26lb.7 of the Board’s Rules Regarding Public Observation of Meetings, at the Board’s offices at 20th Street and C Streets, N.W., Washington, D.C. The following items of official Board business are tentatively scheduled to be considered at that meeting.

  13. Ralph Wiederzane

    Looks like Stevie is going to take it in the cheeks again, he can’t be right for more than a few hours when fighting a monster trend. He must like getting shtooped, of course these dinks will come out and tell us they covered at the bottom yesterday!

    1. Bill

      Mm with no chart to show entrance or exit times…Don’t get me wrong money can be made day trading, I just don’t like fighting for scraps from Janet’s table…. I want the whole meal.

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