Cycle Trading

Stocks emerged out of what appears to be a shortened 26 day, daily cycle low. Stocks regained the 50 day MA and continued higher through Monday, day 8. Stocks formed a swing high today, tagging the daily cycle trend line. The swing high that formed today is a shot across the bow of something sinister is afoot.

Why a swing high on day 9 is a concern is because stocks are beginning to get late in their weekly cycle timing band. This is week 23 for the intermediate equity cycle. Allowing for a normal duration for this daily cycle to print a low would take stocks out to about week 28, which would be getting very late for the timing band for an intermediate cycle low. Therefore we are on alert that this daily cycle could form as a left translated cycle and fail, leading into the intermediate cycle decline.

A break of the blue daily cycle trend line indicates that stocks have entered a daily cycle decline. Losing the 50 day MA would provide further confirmation. A break of the dashed trend line delivers a breach of the intermediate cycle trend line, confirming an intermediate cycle decline.