Cycle Trading

Stocks closed above Friday’s high to complete a swing low. This signals a new daily cycle.

The daily equity cycle printed its lowest point on Friday, day 58, placing stocks deep in their timing band for a daily cycle low. There are bullish divergences developing on the oscillators and the True Strength Indicator has printed a bullish crossover — all of which indicates that day 58 hosted the DCL. Stocks need to break above the declining trend line for confirmation of the new daily cycle.

But not only do I believe that stocks have completed a daily cycle low, the evidence also points to a weekly cycle low has formed as well.

A weekly swing low is required to signal a new intermediate cycle. While stocks would need to rally over 100 points to form a weekly swing low, there are other indicators pointing to a new intermediate cycle. First is the timing band. The intermediate equity cycle printed its lowest point last week, which was week 24. That placed stocks in their timing band for an intermediate cycle low. The weekly TSI is already at a level that has marked other ICL’s and it is beginning to turn. The weekly RSI has been in a bullish pattern and has begun to turn higher, which we have seen at other intermediate cycle lows.