Cycle Trading

The daily equity cycle broke above the upper daily cycle band on day 2 and went on to peak on day 11. Then stocks formed a swing high on day 12, closing below the upper daily cycle band, and has since trended lower.

With the seasonality and the FOMC meeting next week, there is still the chance that stocks could break higher. If stocks can break above the declining trend line, that would signal that day 16 was a half cycle low.

However, stocks lost both the 200 MA and the 50 MA on Wednesday and were unsuccessful in regaining those moving averages today. If stocks continue lower, a close below the lower daily cycle band indicates that the intermediate cycle is in decline.

Since regaining the 10 day MA on day 7, the Miners continue to develop bullishly remaining above the 10 MA. A break above the day 11 high will assure us of a right translated cycle formation. However The Miners have struggled since peaking on day 11. Thursday was day 15, placing the Miners just 3 days shy of entering their timing band for a daily cycle low. A break below the rising trend line would confirm that the Miners have begun their daily cycle decline.