Cycle Trading

We have discussed the change in character that occurred in stocks since November, 2016. The two intermediate declines following the October, 2016 cycle low formed without a failed daily cycle. And since then, stocks have been in a daily, weekly and yearly uptrend.

I believe that another change began in November, 2017.

To illustrate this change we will look at the period prior to the November cycle low and then the period following the November cycle low.

Stocks have been in a daily uptrend since the August cycle low, characterized by peaks above the upper daily cycle band and troughs above the lower daily cycle band. The difference that I have noticed is the Buying on Weakness numbers.

The Buying on Weakness numbers are not a precise tool. I find significance in them near cycle turning points. I also find significance in them when they begin to cluster.

There were 3 Buying on Weakness days following the August cycle low. The 2 immediately following the August cycle low and the one random one in mid October are hardly noteworthy.

But what is noteworthy is when this is compared with the Buying on Weakness days since the November cycle low.

The 2 big differences we see are:
1) No BOW immediately following the November Cycle low.
2) The cluster of BOW days since.

I believe that the “Big Boys” have also recognize the change of character in stocks. And the evidence suggests that they are buying the dip, which in a cycle uptrend is the successful strategy.