Cycle Trading

When stocks closed above the 10 day MA on Wednesday it looked as if day 29 hosted an early DCL. Then stocks broke lower on Thursday.

Even though stocks closed above the 10 day MA on Wednesday, breaking lower on Thursday prevented the 10 day MA from turning up higher, which would have been a confirmation that day 29 hosted the DCL. Instead stocks set the declining trend line on Wednesday. This makes Thursday day 34 for the daily equity cycle placing stocks in their timing band for their daily cycle low.

Thursday’s drop caused stocks to close below the lower daily cycle band. That signals not only are stocks extending their daily cycle decline but they have also entered their intimidate cycle decline. A failed daily cycle confirms that stocks are declining into their intimidate cycle low. So even though a peak on day 27 sets up a potential right translated cycle formation, stocks could break below the previous daily cycle low of 2405.70 in oder to confirm the intermediate cycle decline. But since the weekly cycle is very stretched at 41 weeks, any intermediate cycle decline would likely be short lived.