Cycle Trading

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While stocks posted a positive gain for the day, they are still caught in a daily cycle decline.

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Thursday was day 40 for the daily equity cycle. Stocks attempted to be print a bullish reversal early in the day. However stocks were rejected by the declining daily cycle trend line (as well as the day 10 MA) and closed near the lows of the day. The timing band for stocks runs 35 – 45 days, so there is still time for stocks to break lower.

And looking at the VIX makes me think we will see one more break lower.

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The VIX has been spiking since the daily cycle began its daily cycle decline. Yesterday the VIX filled a miner gap at the 18:45 level. Today after back testing the 50 day MA the VIX spiked higher, once again. There is a large gap at the 24 level that the VIX seems destined to fill.

I think that once that gap is filled we will see stocks print there daily cycle low. And since this daily cycle should form as a right translated cycle printing a higher low, we should see the next daily cycle print a higher high.