Cycle Trading

Monday was day 49 for the daily equity cycle. At this point if stocks have not already printed a DCL, then they are declining into their DCL. But instead on Monday stocks printed a new daily cycle high. The Fed flooding the market with liquidity has negated our timing band tool. So we will need to rely on our two other tools, the trend line and cycle bands.

Since rallying out of the May DCL stocks have been in a daily uptrend that has been characterized by highs forming above the upper daily cycle band and lows forming above the lower daily cycle band. Stocks will remain in their daily uptrend unless they close below the lower daily cycle band. Therefore any swing lows forming above the lower daily cycle band is a buy signal. Then once stocks form a swing high accompanied by a close below the daily cycle trend line – that will signal the daily cycle decline.