Cycle Trading

Stocks formed a swing low on Tuesday. While Monday was still 4 days shy of the daily cycle timing band, it looks as if a daily cycle low has formed.

First off, it is not unusual for an extended daily cycle to be followed by a shortened cycle. Secondly, Stocks formed a swing low on a day that delivered a strong rally gaining 1.78% on the day on over 90% up volume. Stocks also regained the 200 day MA. These are all signals that a daily cycle low has been left behind. Next I am looking for a close above the lower daily cycle band to help confirm the new daily cycle.

And what is developing on the weekly chart indicates not only a new daily cycle has started, but a new weekly cycle as well.

Stocks are forming a bullish weekly reversal. This will ease the parameters for forming a weekly swing low. And with stocks being on week 20 this places them in their timing band for an intermediate cycle low. Notice that the weekly reversal has allowed stocks to remain above the lower weekly cycle band, maintaining the weekly uptrend. If a weekly swing low forms next week, that would indicate that now only has a daily cycle low formed, but the intermediate cycle low as well.