Cycle Trading

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Monday was day 31 for the daily equity cycle. Since stocks have entered their timing band to print a daily cycle low today’s, bullish reversal could signal a daily cycle low.

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The daily equity cycle peaked on day 8. While day 21 had been the lowest point since the day 8 peak, it was too early in the daily cycle to be the daily cycle low. Stocks broke below the day 21 low today, printing a lower low. Now that stocks have entered into their timing band to print a daily cycle low, a swing low could signal a new daily cycle. Today’s bullish reversal has eased the parameters for forming a swing low. A break above 2021.66 forms a swing low. A break above the declining dashed trend line signals a new daily cycle.

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This is week 16 for the intermediate equity cycle. While stocks have delivered an intermediate trend line break they have yet to deliver a failed daily cycle to confirm the intermediate cycle decline. Therefore our expectation is to see this daily cycle fail, leading to the intermediate cycle decline.