Cycle Trading

Stocks rebounded after the 40 point, 2.28% beat down delivered on Monday. Is this only a dead cat bounce?

Monday was day 30 for the daily equity cycle. Stocks are in the early stages of the timing band for a daily cycle low. I tend to think that stocks will drop further. However we will need to keep an eye on the TSI trend line. A break above the TSI trend line would indicate if something more than a dead cat bounce is occurring.

Bonds printed an inside day on Tuesday. After nearly going vertical for the past 4 weeks bonds have entered their timing band to seek out a daily cycle low. A break below 107.61 forms a daily swing high. Then a break of the daily cycle trend line will confirm a daily cycle decline. Since the current peak to the daily bond cycle stands at 21 days, bonds are assured a right translated nature to this daily cycle. Therefore our expectation is to see the next daily cycle form a higher daily cycle high. I feel that one thing to look for is to see if a swing low forms off of support at the 200 MA. If that happens that may mark the daily cycle low.