Cycle Trading

Stocks just had a brutal decline, dropping over 20%.
Despite this drop, the bigger picture is showing us bullish behavior.

First I want to look at the monthly RSI. Notice that during bear markets the monthly RSI stays oversold for extended periods. But during bullish advances the monthly RSI recovers quickly.

And on closer inspection we can see that the monthly RSI is already recovering

Next, let’s take a look at the longterm weekly chart. Marked with arrows are the 4 year cycle lows. Over the past 40 years only two 4 year cycle lows occurred during a bear market. All of the other 4 year lows either formed above the 200 week MA or tested the 200 week MA.

A close up low at the weekly chart shows that stocks had a textbook bullish reversal off of the 200 week MA …