Cycle Trading

Stocks formed a swing high on Tuesday.

Tuesday was day 22 for the daily equity cycle. That places stocks 8 days shy of their timing band for a daily cycle low. A close below the 10 day MA would increase the odds of this swing high resulting into a daily cycle decline. A break below the daily cycle trend line will confirm a daily cycle decline.

A peak on day 21, or thereafter, shifts the odds towards a right translated daily cycle formation. Which gives us the expectation of stocks forming a higher daily cycle low. That aligns with stocks being in a daily uptrend. Once the daily cycle decline is confirmed, as long as stocks form their swing low above the lower daily cycle band then stocks will remain in their daily uptrend. The correct strategy in a daily uptrend is to buy the dip.