Cycle Trading

Stocks delivered more bullish follow through on Wednesday.

The clear and convincing break of the declining trend line along with the close above the lower daily cycle band confirms that stocks printed an extended 60 day, daily cycle low last Thursday. Now a close above the upper daily cycle band will indicate that stocks have also begun a new intermediate cycle.

The Transports appear to have done so …

The transports did not form a double bottom like stocks and have been rallying since 1/21/16. The transports closed above the upper daily cycle band on Tuesday which indicates a new intermediate cycle has begun. Wednesday the trannies delivered more bullish follow through by closing above the 50 day MA.

The weekly charts show that the transports formed an intermediate low in January. They closed above the declining weekly trend line last week. And appear on track for closing above both the 200 week MA and the lower weekly cycle band, all indicating the new intermediate cycle for transports.