Over the past few weeks I have been writing about the US stock market’s decline into an 80-day cycle trough. Now it is time to start thinking about the bounce out of that trough. It might be upon us as soon as next week.
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Here is the most likely analysis in my opinion, which has the cycles running short:
As indicated on the chart, the bounce will be the move out of the expected 80-day cycle trough, and it should cross cleanly through the 20-day FLD on the way up (providing a long trading opportunity).
Here is the alternate analysis:
That is a valid analysis with the 40-day cycle trough occurring late, at 40 days after the trough at the beginning of February. This analysis also expects a bounce soon (probably nearer the end of next week), but it will be a bounce out of a 20-day cycle, and price should find resistance at the 20-day FLD before turning back down to a later 80-day cycle trough.
Here is a chart of the Nasdaq 100 which supports the first analysis:
The cycle moves are clearer in this chart, and the move down into the 80-day cycle trough is stronger, cautioning us not to hang around too long waiting for that move down in the S&P 500.
Have a good week and profitable trading.
