Cycle Trading

Stocks formed a swing high on Thursday.

Thursday was day 57 for the daily equity cycle. Which places stocks very deep in its timing band for a DCL. Stocks formed a swing high and closed below the accelerated trend line and the 10 day MA to signal the daily cycle decline. Stocks should close below the (blue) daily cycle trend line and turn the 10 day A lower in order to print its daily cycle low. With a peak on day 56, this daily cycle is extremely right translated which indicates that the daily cycle decline should be short (but violent) in terms of duration.

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. If a swing low forms above the lower daily cycle band then stocks will remain in its daily uptrend and trigger a cycle band buy signal. Another indicator to watch is RSI. RSI has been embedded in overbought during the advancing phase of this intermediate cycle. Once RSI gets to oversold, if there is a quick reversal that will signal that stocks are continuing the advancing phase of its intermediate cycle. If RSI embeds in oversold that would indicate the beginning of the intermediate cycle decline.