Cycle Trading

Facts about the intermediate cycle:
* Stocks are currently in a weekly uptrend
* Closing below the lower weekly cycle band will end the weekly uptrend.
* This is week 19 placing stocks in their timing band for an intermediate cycle decline.
* Stocks formed a weekly swing high last week.
* Stocks broke lower this week, breaking below the 10 week MA.
* Intermediate cycle declines normally have a failed daily cycle

Facts about the daily cycle:
* Stocks closed below the lower daily cycle band on Monday.
* Closing below the lower daily cycle band begins a daily downtrend.
* Daily downtrends are associated with intermediate cycle declines.
* Stocks have not printed a failed daily cycle.
* Stocks formed a swing low on Wednesday.
* Stocks are in their timing band for a daily cycle low.

Conflicting facts:
* Wednesday’s swing low indicates a new daily cycle.
* Breaking below the 10 week MA indicates that stocks have begun an intermediate cycle decline.

There is still some risk that stocks will continue the intermediate cycle decline. However long positions can be entered based on the daily swing low, with the stop being placed below Monday’s low. For those who would like more confirmation, the long positions can be entered once stocks close above the 10 day MA or once stocks break above the declining trend line. Another option would be to wait for a weekly swing low to form.