Cycle Trading

Wednesday saw a bearish reversal printed on equities. And Thursday saw a clear and convincing trend line break. With stocks closing near the highs of the day it appears that equities are poised to reverse again.

The daily cycle peaked on Wednesday, day 24. If a swing low forms off the reversal printed today then we need to consider if this was a 25 day daily cycle. Should this hold, it would be well shy of the normal timing band for a daily cycle low of 30 – 45 days.

Yet the correction fits in the range of corrections that we have been witnessing during this intermediate cycle.

The three previous daily cycle lows corrected in a range of 21 points to 60 points and currently this correction sits at 51 points.

What I think is happening is that stocks are entering a blowoff phase. Stocks are so bullish, this may be all we see for this daily cycle correction.

Since the 2009 crash, stocks seem to be rising at a faster rate. To right now stocks look to be going vertical. I do not believe that we will get an intermediate correction until stocks break through 1700.

I will point out that since the previous daily cycle low on 4/18 there has been many Selling on Strength Days that totaled to 837 million. We will need to keep a watch on the Selling on Strength numbers going forward. I have a feeling that these SOS numbers will only increase as we get closer to 1700.

And now a word about the Miners

It is encouraging to see that the Miners were able to (finally) hold up in the face of the equity correction. The also formed a swing low and broke above the declining cycle trend line confirming a new daily cycle. With gold appearing to be beginning its second daily cycle following a right translate cycle then the Miners should follow suit.

While the Miners still have a long way to go before a new trend is established, maybe they are finally getting in gear …