MSOS: Is the 50-Day Cycle Low In?

 

Today was an interesting day for MSOS for several reasons, and I want to walk through what I was watching and why I think it matters. As you know, just yesterday I wrote about the 50-day cycle that is expected to bottom this week. Going into today, I was already on alert for signs of that low coming in, and I have to say I saw some encouraging evidence both yesterday and again today.

On the left is a 30-minute chart of MSOS, and in the lower pane I’m comparing MSOS versus the SPY. The first thing that immediately stood out to me was how well the 3.95 level held. That area acted like a clear floor of support throughout the session. Every time price dipped into that zone, sellers couldn’t push it any lower. That alone was noteworthy, but what really caught my attention was what the broader market was doing at the same time.

While MSOS was holding firm at support, the SPY was making new intraday lows. Normally, you’d expect MSOS to crack if the market is selling off, but that didn’t happen. Instead, the ratio line in the lower pane began to rise, showing bullish divergence. That’s your first real clue that something has changed. When a stock or ETF refuses to go down while the market is making new lows, it usually means buyers are stepping in and quietly accumulating shares.

Another important detail was volume. The last 30 minutes of trading saw the heaviest volume we’ve seen in weeks. That’s not something I ignore. Heavy volume into the close, especially near support and after a prolonged decline, often signals institutional participation. In my opinion, that volume confirms what the relative strength was already hinting at: demand is starting to show up.

Based on all of this, I believe the 50-day cycle low that we were expecting this week may already be in. Now, nobody knows for sure what will happen next, and I’m the first to admit that. Markets don’t give guarantees. But if I’m right, I think we’ll see MSOS begin to trend higher over the coming weeks.

Looking at the daily chart on the right adds more context. We came very close to filling the gap, which often happens near important lows. Even more important, we broke the downtrend line drawn from the December high. That doesn’t automatically mean straight up from here, but it is a meaningful change in character.

Whether this turns out to be a major low or not remains to be seen. What matters most to me is risk management and protecting capital. At these levels, I believe the reward-to-risk is favorable, which is why I added yesterday and again today to the long position I’ve been holding for quite some time. Now we wait and let the market tell us the rest. Let’s see what happens.

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