Cycle Trading

Stocks are very early in their new intermediate cycle.

The decline into the week 23 low saw stocks break below the weekly trend line and close below the 50 week MA to confirm the intermediate cycle decline. The rally out of the week 23 low broke above the declining weekly trend line, closed above the 10 week MA and printed a new all time high last week, all of which confirms that stocks on in week 3 of their new intermediate cycle.

A look at the daily chart show us that as stocks emerged out of their 59 day, daily cycle low, they began to close above the upper daily cycle band to establish a new daily uptrend. Closing above the upper daily cycle band also confirms that stocks have begun their new intermediate cycle.

The expectation for this first daily cycle is to form as a right translated daily cycle. Stocks did get a bit stretched above the 10 day MA and it appears that there was some profit taking as stocks broke out to a new all time high. That should allow the 10 day MA to catch back up to price. So if a swing low forms above the lower daily cycle band during this pullback then stocks will remain in their daily uptrend and trigger a cycle band buy signal.