Cycle Trading

Stocks gapped higher and printed a Doji candle, setting up a potential 3 day Evening Doji Star reversal pattern.

Should stocks gap lower and form a swing high that will complete the 3 day reversal pattern to signal that the daily cycle is in decline. A peak on day 17 still favors a left translated daily cycle formation which aligns with our intermediate cycle framework.

The Transports appear poised for a daily cycle decline as well.

Tuesday was day 17 for the Transports daily cycle. The Transports printed a huge bearish engulfing candle that closed below the 50 day MA which signals that the Transports have begun their daily cycle decline.

The Russell is also exhibiting evidence of a pending daily cycle decline.

Tuesday was day 17 for the Russells’ daily cycle. The peak on day 7 locks in a left translated daily cycle formation. The Russell also closed below the 10 day MA, turning it lower. That, along with the bearish TSI zero line crossover, indicates that the Russell has begun its daily cycle decline.