Cycle Trading

Back in April we looked at how Biotech was emerging as a new market leader. Tonight we will look at this further.

The daily equity cycle peaked on Wednesday, formed a swing high formed on Thursday, then stocks closed below both the daily cycle trend line and the 10 day MA on Friday to signal the daily cycle decline.

Notice:
1) Stocks did not even break above the 200 day MA prior to beginning the daily cycle decline.
2) Stocks printed a lower low on Monday, but ended up 0.42%

The Semiconductors were similar to stocks. They also peaked on Wednesday, formed a swing high on Thursday, then closed below both the daily cycle trend line and the 10 day MA on Friday to signal the daily cycle decline.

Notice:
1) The Semiconductors closed below the 200 day MA on Friday.
2) The Semiconductors printed a lower low on Monday, but ended up 1.03%.

Biotech also formed a swing high and closed below the 10 day MA last week to signal their daily cycle decline.

Notice:
1) Biotech was well above the 200 day MA and did not even come close to it during this pullback.
2) Biotech formed a swing low on Monday, rallying for 3.02%

The relative strength is very apparent.

Additionally:
Biotech is in a daily uptrend. The swing low formed above the lower daily cycle band to signal that Biotech remains in its daily uptrend and has triggered a cycle band buy signal, with the stop being placed below Friday’s low.