Cycle Trading

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Stocks managed to form a swing low on Thursday, barely.

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Stocks are deep in their timing band for a daily cycle low. A swing low has good odds of marking the daily cycle low. We would like to see a more clear and convincing swing low before we label this a daily cycle low.

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The NASDAQ also managed to form a weak swing low. Once again we need to see a more clear and convincing swing low here as well.

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Biotech, one of the leading sectors, delivered a strong bullish reversal. That bullish reversal found support at the 200 MA and was followed by a clear and convincing swing low. So it appears that Biotech printed a daily cycle low.

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The Russell also delivered a strong bullish reversal followed by a clear and convincing swing low that allows us to label Wednesday as a daily cycle low.

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Bonds formed a swing high. Thursday was day 22 for the daily bond cycle. The swing high following the massive bearish reversal signals the daily cycle decline. Bonds are already in their timing band to print a daily cycle low. Bonds should print a daily cycle low over the next 5 days that breaks below the daily cycle trend line.

So both stocks and bonds have formed swings. Now we need to see some follow through.

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