Cycle Trading

Stocks were up 4.6% on Monday. They formed a daily swing low and closed back above the 200 day MA. These data points indicate that stocks have printed their daily cycle low.

But did they?

Stocks printed their lowest point on Friday, day 19, which is too early to expect a DCL to form. Over the past 2 years stocks average 39.5 days per daily cycle. And during that time the shortest daily cycle was 33 days. So if Friday was a daily cycle low, it may be the shortest daily cycle on record. Having said that, long positions could be entered on the chance that this is the shortest daily cycle on record with the stop being Friday’s low.