Cycle Trading

Stocks are giving us mixed signals.

The daily chart shows us that stocks are very deep in its timing band for a daily cycle low. 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 formed a swing low above support from the 50 day MA to signal a new daily cycle. A close above the 10 may MA will have us label day 59 as the DCL.

But stocks are telling us something different on the weekly chart.

Stocks formed a weekly swing high this week. This is week 24, placing stocks in their timing band for an intermediate cycle low. A close below the 10 week MA will signal the intermediate cycle decline. So while the short term daily chart favors price rallying out of a DCL, the longer term weekly chart indicates 3 – 7 weeks of stocks declining into an intermediate cycle low.