Cycle Trading

We have previously discussed a change in character in stocks. Specifically how the previous 2 intermediate cycle declines did not form a failed daily cycle. There appears to be a change in character again.

I think that we need to recognize the change in character since day 30. It is clear that stocks began to accelerate since then. This highlights the importance of our cycle band tool. Our cycle band tool tells us that stocks are clearly in a daily uptrend. Since a swing low formed above the upper daily cycle band, stocks remain in their daily uptrend. And the correct strategy in an uptrend is to buy the swing low.

However, there is a joker in the deck lurking out there that is the pending resolution of the government shutdown. We could very well see a resolution to the government shutdown triggering a “sell-the-news“ event sending stocks into their daily cycle decline. If so, then
that would make Friday day 43 for the daily cycle.