Cycle Trading

In the Weekend Report we discussed that the Banks, the Russel and the Transports all were breaking lower on Friday, drawing the conclusion that stocks were likely to follow.

On Monday, stocks broke lower.

The continued selling has now caused stocks to break below the previous yearly cycle low. This forms a failed yearly cycle and confirms that the 4 year cycle is in decline. The 4 year cycle peak occurred in September, month 31, assuring us of a right translated 4 year cycle. Since the previous 4 year cycle ran a bit long at 52 months we could certainly see a shortened 4 year cycle here. Coupled with that fact that stocks are well over due for an intermediate cycle low (45 weeks) as well as being in the timing band for a yearly cycle low, once stocks form their daily cycle low it has to potential to also mark the intermediate, yearly, and 4 year cycle low.