Cycle Trading

Stocks have been in a daily uptrend. The daily equity cycle peaked on day 43, then formed a swing high and broke below the daily cycle trend line to print its lowest point on day 45. Stocks have since broke higher to signal that day 45 hosted a shallow daily cycle low. And since stocks did not close below the lower daily cycle band they remain in their daily uptrend.

Even though stocks have broke out to new highs, they have not really gained any traction since emerging from the day 45 DCL. Perhaps they are waiting on the Transports to begin a new daily cycle …

The transports peaked on day 35 and have have been drifting lower ever since, printing their lowest point on Thursday, day 49. The transports rallied after tagging the 50 day MA to form a bullish reversal on Thursday. The bullish reversal eases the parameters for forming a swing low. And since the transports are deep in their timing band for a DCL, a swing low has good odds of marking the daily cycle low. Therefore a break above 9811.87 forms a swing low to signal a new daily cycle. A break of the declining trend line will then confirm the new daily cycle. I believe that once we see the transports confirm a new daily cycle then we will see stocks get in gear.