Cycle Trading

Until proven otherwise, our frame of reference has equites entering their yearly cycle decline. The first to begin is the NASDAQ.

The NAS printed an intermediate cycle low in early February. After peaking on week 4, the NAS declined and broke below the early February low three weeks ago, forming a failed intermediate cycle. A failed intermediate cycle signals that the yearly cycle decline has begun. The expectation is to see the NAS now form left translated daily cycles until it prints its intermediate low which is not due for another 8 – 10 weeks.

The S&P just left behind a right translated daily cycle 10 days ago. Our normal cyclical expectation is to see a higher high print following a right translated cycle. Sometimes there is an exception if stocks are rolling over into an intermediate low, which is what I think is happening.

And the Selling on Strength numbers seem to agree with this view.