Cycle Trading

The status of the intermediate cycle had us expecting stocks to form a left translated daily cycle in order to usher in the impending intermediate cycle decline.

It looks as if stocks delivered a bullish surprise instead and printed a day 24 – daily cycle low on Thursday.

The daily equity cycle peaked on day 18, formed a swing high, and then closed below both the daily cycle trend line & the 10 day MA confirming the daily cycle decline.

Prior to Thursday, the daily cycle was characterized by frequent SOS days.
I think that the absence of a SOS day on Thursday suggests Fed intervention, but that is my speculation. There was no SOS day on Thursday which I view as a change of character that signals a new daily cycle.

What is certain is that stocks printed a bullish engulfing candle on Thursday that closed above the declining trend line, which eases the parameters for forming a swing low. A break above 2829.91 forms a swing low to signal a new daily cycle.

Some of you make be asking if 24 days is too early to expect a DCL. The timing band for a DCL for stocks runs from day 30 – day 45 so yes a 24 DCL is early, but it can happen. I will remind you that as recent as May stocks printed a 23 day DCL.

The NYSE New Highs, New Lows is something that I like to track DCL’s, ICL’s and YCL’s. ICL’ normally reach the lower black line. DCL’s normally reach the middle blue line. And the current daily cycle decline did satisfy this criteria by reaching the blue line that signals a DCL.

Regardless if this is a half cycle low or a daily cycle low, if a swing low forms that will trigger a Cycle Band Buy Signal because stocks are in a daily uptrend. They will remain in their uptrend until they close below the lower daily cycle band.