Cycle Trading

The daily equity cycle peaked on day 10 and has been trending lower ever since. Tuesday was day 23 and stocks printed another lower low. This daily cycle is shaping up to form as a left translated, failed daily cycle. Which is what we normally see at the conclusion of an intermediate cycle.

However there are two inherent bullish signals that are brewing.

The two inherent bullish signals are:
1) The extremely right translated nature to the current intermediate cycle
2) The over 1.9 Billion Buying on Weakness that has printed.

Our Cycle Studies tell us that right translated cycles are usually followed by a cycle that goes on to print a higher cycle high. With the intermediate cycle hosting a peak on week 31 and this being week 34 the current weekly cycle is forming as an extremely right translated cycle. And at week 34, it will likely bottom at the conclusion of the current daily cycle.

As mentioned, today was day 23 for the daily equity cycle. Stocks are 7 days short of entering their timing band to print a daily cycle low. I would not be surprised to see stocks bounce higher here before making their final plunge into the daily cycle low. Any counter trend rally should be contained by the convergence of the day 10 MA, the 50 day MA and the declining cycle trend line. Then a break of 2067.93 forms a failed daily cycle.

So cyclical behavior has us expecting the next intermediate cycle to form a higher intermediate cycle high. Also there has been close to 2 Billion Buying on Weakness so far. This is a huge number, larger than what we would expect to see as we approach an intermediate cycle low.

It seems that the smart money is beginning to position themselves for another run higher.