Cycle Trading

Stocks have established that they are in a daily uptrend. A daily uptrend is price series that is characterized by peaks forming above the upper daily cycle band and lows (troughs) forming below the lower daily cycle band.

Monday was day 30 for the daily equity cycle, placing stocks in their timing band for a daily cycle low. While stocks have formed a swing high and closed below the 10 day MA, stocks still need to deliver a break below the daily cycle trend line to confirm the daily cycle decline.

I would prefer to see a clear and convincing break below the daily cycle trend line to confirm that the daily cycle is in decline. But we need to be ready should stocks deliver a cycle band buy signal. Since stocks are in a daily uptrend, a swing low that forms above the lower daily cycle band will indicate a continuation of the daily uptrend. Therefore the formation of a swing low above the lower daily cycle band will trigger a cycle band buy signal.