Cycle Trading

Stocks closed below the 10 day MA on Thursday to signal the daily cycle decline.

While there is some uncertainty to the status of the daily cycle, I am in the camp that stocks hosted a mild DCL on day 33. Under this scenario, stocks would be in their 5th daily cycle making Thursday day 15. Since most intermediate cycles are comprised of 2 – 3 daily cycles, this being the 5th daily cycle would then favor this break lower developing into an intermediate cycle decline.

Oil is currently on week 30 for its weekly cycle, placing it in its timing band for an intermediate cycle decline. The daily swing high combined with closing below both the 50 day MA and the 10 day MA signals that oil is declining into its daily cycle low. The peak on day 12 indicates a left translated daily cycle formation. Oil needs to form a failed daily cycle in order to complete its intermediate cycle decline. A break below the previous daily cycle low of 64.43 will form a failed daily cycle.