Cycle Trading

Stocks have delivered some sell signals this week.

Stocks have formed a daily swing high and lost the 10 day MA. Also, the True Strength Indicator has printed a bearish crossover. So the question is are stocks heading into a daily cycle low or perhaps only into a half-cycle low.

While stock have sold off over the past two days, the Buying on Weakness numbers have printed 628 million and 715 million. This indicates big money positioning for stocks to go higher. Which aligns with our cyclical expectations. Stocks are in the first daily cycle for a new intermediate cycle. First daily cycles are normally right translated cycles that peak usually after day 20.

If a swing low forms above the lower daily cycle band that would signal that that this was only a move into a half-cycle low and stocks are poised to break out to new highs.