Cycle Trading

Stocks continue to rally out of what I believe will be an intermediate cycle low.

Thursday was day 8 for the daily equity cycle. Stocks got a bit stretched above the 10 day MA & appear to be consolidating to allow the 10 day MA to catch up to price. Stocks have already confirmed the new daily cycle. I suspect that stocks will soon confirm that 2/09/18 was also an intermediate cycle low.

One of the things that I look for to confirm the new daily cycle is the weekly advance/decline line.

During an intermediate cycle decline the weekly advance/decline line usually breaks below the 10 week MA. Consequently, recovering the 10 week MA is something that confirms the new intermediate cycle. And we are still waiting on confirmation.

Tech has already confirmed the new intermediate cycle.

Technology is one of the leading sectors. It has been so strong that the decline into the ICL did not even result with the weekly advance/decline line losing the 10 week MA. Now we see some bullish divergence developing as the weekly advance/decline for tech has already broke out to a new high. Which means we can expect the tech sector to follow suit, leading the rest of the market higher.