Cycle Trading

Stocks printed another Buying on Weakness day on Thursday.

Thursday was day 52 for the daily equity cycle. Stocks have begun to close below the 10 day MA confirming the daily cycle decline. And stocks continue to cluster these Buying on Weakness day as it seeks out its daily cycle low.

We discussed on Tuesday how stocks tend to cluster these BOW days as it declines into a major cycle low. The Buying on Weakness days in the above chart from the November 2016 ICL totaled 5043 million between 8/25/16 and 11/04/16. I contend that the Clustering of these Buying on Weakness days foreshadowed the November, 2016 ICL.

And the resulting rally out of that ICL.

Tonight I wanted to show you the BOW cluster prior to the April, 2017 ICL.

Once again we see this clustering of Buying Weakness days prior to a major cycle low.

And once again the clustering of these Buying on Weakness days foreshadowed another major cycle low.

So getting back to the current daily cycle chart we can see that stocks formed a swing high and has begun to close below the 10 day MA. We should see the 10 day MA turn lower before stocks print their cycle low.

Stocks are in a daily uptrend. If a swing low forms above the lower daily cycle band they will remain in their daily uptrend.