Cycle Trading

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The yearly equity cycle peaked in September, month 27, at an intra-month high of 2019.26. Then October saw stocks print a failed daily and weekly cycle confirming the yearly cycle decline.

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The yearly cycle decline broke below the monthly trend line, further confirming the yearly cycle decline. Stocks found support at the 20 month MA and reversed higher. Besides the decline into the 2009 low, the previous 7 yearly lows all tested the 20 month MA during their yearly cycle decline. With a failed intermediate cycle in hand, stocks has satisfied the criteria for a yearly cycle decline.

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Today stocks broke above October’s intra-month high of 2018.19 forming a monthly swing low. The break out to a new high signals a new yearly cycle.

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As we can see above, Monday did break above the September high. Monday was day 13 for the daily equity cycle. This is the first daily cycle of a new intermediate and yearly cycle. Our expectation is to see this first daily cycle form in a right translated manner, peaking on or after day 20.

However it appears the the True Strength Indicator is beginning to roll over. This suggests that we could see stocks decline into a half cycle low. A slight pull back here would allow the 10 day MA to catch up before stocks making one more push higher to lock in a right translated nature to this first daily cycle.