Cycle Trading

Stocks continued their bullish follow through Thursday.

Thursday was day 3 for the new daily equity cycle and stocks continued to rally higher. Stocks have gained over 5 % since bottoming on Monday, leaving little doubt that a daily cycle low has been left behind. Stocks stopped just short of closing above the upper daily cycle band, which would have confirmed that an intermediate cycle low had been set. And the weekly chart continues to develop bullishly which points to a new intermediate cycle has started.

This is week 20 for the intermediate equity cycle. That places stocks right in their timing band to print an intermediate cycle low. And the bullish weekly reversal that is forming has erased all of the losses from the previous 3 weeks, which has eased the parameters for forming a weekly swing low. Once a weekly swing low forms that will signal a new intermediate cycle.

Stocks also look like they will end the week above the upper weekly cycle band, which will mean that stocks will have maintained their weekly uptrend. They will remain in a weekly uptrend unless they close below the lower weekly cycle band.

Bonds delivered a warning of a possible daily cycle peak is forming.

Bonds printed a bearish engulfing candle on Wednesday, day 4. Bonds went on to form a daily swing high on Thursday. Some bearish follow through will indicate that bonds have begun their daily cycle decline, forming a left translated daily cycle. With this being week 16 for the intermediate bond cycle, the decline into a daily cycle low should also usher in the intermediate cycle decline.