Cycle Trading

Stocks formed a daily swing high on Tuesday.

Tuesday was day 17 for the daily equity cycle. The swing high here could lead to a daily cycle decline. However I am in the camp that a yearly cycle low has formed and probably the 4 year cycle low as well, which I discussed in the Weekend Report. Therefore I think that it is more likely that the swing high will lead to a half cycle low.

So what I am watching here is the daily cycle band. Stocks closed above the upper daily cycle band on Friday. Closing above the upper daily cycle band ends the daily downtrend and begins a daily uptrend. At this point stocks should not close below the lower daily cycle band unless stocks have begun their daily cycle decline.