Cycle Trading

The intermediate (weekly) equity cycle peaked in August and has been in decline since.

Stocks printed their lowest point on week 15, following the peak on week 7, and has drifted sideways since. This is week 18 for the intermediate equity cycle and stocks have just entered their timing band to seek out their intermediate cycle low. Since 15 weeks is too early for an intermediate cycle low, our cyclical expectation is to see stocks break below the week 15 low one 2114.72 in order to complete their intermediate cycle decline.

Day 23 was too early for a daily cycle low. Coupled that with the fact stocks have yet to break above the declining trend line makes quite likely that Monday was day 35 for the daily equity cycle. That places stocks in their timing band for a daily cycle low. Since a cycle low is defined as the lowest point following the daily cycle peak, then stocks will need to break below the day 23 low of 2114.72 in order to complete the daily cycle decline. Then a swing low accompanied by the declining trend line break will confirm a new daily cycle and also signal a new intermediate cycle has begun.