Cycle Trading

Stocks delivered a buy signal on Tuesday.

The daily equity cycle peaked on day 27 then proceeded to decline into its daily cycle low. Stocks printed their lowest point on Monday, day 36, placing stocks in their timing band to form a daily cycle low. Stocks formed a swing low on Tuesday and closed above both the 10 day MA and the 50 day MA which signals that this was day 1 for the new daily cycle. A break of the declining trend line will confirm the new daily cycle. And a break back above the upper daily cycle band will signal a a new daily uptrend.

Stocks also delivered a weekly buy signal on Tuesday.

Stocks have yet to form a failed daily cycle to confirm that the intermediate cycle is in decline. So while stocks are overdue for an intermediate cycle decline, stocks have triggered a weekly buy signal. Stocks have formed a bullish crossover on the weekly RSI. The last 2 times the weekly RSI delivered a buy signal resulted in multi week rallies.

The intermediate cycle is extremely stretched at 42 weeks. Eventually stocks will deliver an intermediate degree correction. They may even do so during this new daily cycle. So while there may be some uncertainty about when stocks will deliver an intermediate degree correction what is certain is that stocks are currently in a weekly uptrend. Stocks will remain in their weekly uptrend until they close below the lower weekly cycle band.