Cycle Trading

We discussed on Saturday how stocks peaked on day 21, formed a swing high and then breached the daily cycle trend line on Friday setting up for a daily cycle decline.

Stocks delivered a clear and convincing trend line break on Tuesday, confirming that the daily cycle is in decline.

Tuesday was day 27 for the daily equity cycle, placing stocks 3 days shy of entering its timing band for a daily cycle low. The peak on day 21 shifts the odds toward a right translated daily cycle formation.

However, due to the status of the intermediate cycle I believe that something more sinister is afoot. I believe that the current daily cycle is still at risk of forming as a left translated, failed daily cycle. A break below the previous daily cycle low of 2352.72 forms a failed daily cycle, which will confirm that the intermediate cycle is in decline.

Tuesday’s daily cycle trend line break has caused stocks to form a weekly swing high. At 34 weeks stocks are very late in its weekly cycle and due for an intermediate decline. Stocks are currently sitting right on the weekly trend line. If stocks continue their daily cycle decline they will break below the weekly trend line signaling that the weekly cycle is in decline. And in the Weekend Report I plan to tie this in with the status of the yearly cycle.