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Cycle Trading

Right on Cue

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I have had a few emails inquiring about the count of the daily equity cycle, wondering if today was day 22 or even day 48. While we have our daily cycle count at day 11, we cannot rule out the possibility that today was either day 22 or day 48. Admittedly our daily cycle count lacks some clarity, however what is clear is that stocks are printing lower highs. We were also watching for a reversal at the upper trend line. So today, right on cue, stocks printed a bearish reversal.

spx daily

We are waiting on a break out of consolidation to provide some clarity to our daily cycle count. The bearish reversal postpones that. But the reversal is in alignment with what we see developing on the weekly chart. And it is what we see on the weekly chart that has me thinking that today is day 11.

spx weekly

Stocks printed their yearly cycle low in early October. The intermediate equity cycle peaked on week 18 after emerging out of that October low. This is week 25 for the intermediate equity cycle. Stocks began this week by being rejected by the declining (blue) weekly trend line.

At week 25, stocks are in their timing band to print an intermediate cycle low. If our daily cycle count is accurate with today being day 11, then stocks will need another 4 – 6 weeks before printing a daily cycle low. A peak on day 11 would lock in a left translated formation to the daily cycle, making it likely to see a failed daily cycle form. And a failed daily cycle confirms the intermediate cycle decline.

6 responses to “Right on Cue”

  1. Geurt Hoekman Avatar
    Geurt Hoekman

    Thanks for your email.
    One question I have regards the SPX.
    You said in this email: we will see a bearish break out.
    Means this we go to the down side or will we go up?
    In generally, are we going up or down with the SPX in the coming 4 – 6 weeks.
    I try to understand your emails before I take a subscription.
    Thanks for your help,
    Geurt Hoekman.

    Reply
    1. likesmoneystudies Avatar
      likesmoneystudies

      Geurt,

      By a bearish break out I mean that stocks should break lower.

      Stocks usually decline into an intermediate low every 20 -24 weeks, although recently they have been stretching out to 32 weeks. With stocks on week 26 we need to be on alert for an intermediate decline.

      If the daily cycle count is accurate at day 11, the completion of this daily cycle would take stocks out to about week 30 – 32. Which gives this daily cycle good odds of forming as a failed left translated cycle.

      I hope that this helps.

      LM

      Reply
      1. Geurt Hoekman Avatar
        Geurt Hoekman

        Thanks LM.
        What is a failed left translated cycle, if I ask not too much?

      2. likesmoneystudies Avatar
        likesmoneystudies

        Geurt,

        A failed daily cycle is when the asset in question, let’s say bonds, break below the previous daily cycle low.
        Bonds printed a daily cycle low on January 22, February 17, and March 6.

        The new daily cycles that followed the lows printed on both January 22 and February 17 failed.
        The new daily cycle following the low on March 6 did not fail.

        failed

        I am sorry that I did not see your question earlier.

        LM

      3. Geurt Hoekman Avatar
        Geurt Hoekman

        Thanks a lot…. your teaching is excellent.

  2. Geurt Hoekman Avatar
    Geurt Hoekman

    Thanks for your email. One question I have regards the SPX. You said in this email: we will see a bearish break out. Means this we go to the down side or will we go up? In generally, are we going up or down with the SPX in the coming 4 – 6 weeks. I try to understand your emails before I take a subscription. Thanks for your help, Geurt Hoekman.

    Reply

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