Cycle Trading

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Stocks extended their daily cycle decline today.

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Wednesday was day 38 for the daily equity cycle. Stocks are in their timing band to print a daily cycle low. A swing low and declining trend line break will confirm a new daily cycle. The 301 million BOW that printed today also signal that a new daily cycle is near. Even though a new daily cycle is due to begin, any rally will likely be short lived because there are signals that indicate that the intermediate cycle has begun.

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First off we see that the Russell has already pretend a failed daily cycle. A failed daily cycle confirms the intermediate cycle decline and the Russell is now leading the way into an intermediate cycle decline.

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The intermediate cycle peaked three weeks ago. A weekly swing high formed last week. And today’s break lower has caused stocks to breach a trend line that stretched back to 2012. There is also a bearish zero line crossover on the weekly True Strength Indicator. The bearish weekly crossover has been a reliable indicator of an intermediate cycle decline.