Cycle Trading

The Financials are having a good week.

The Banking Index is breaking convincingly above the 50 week MA.

And the Transports closed on Tuesday at a new all time high.

The market leading Semi’s (below) did break out to a new all time high on Monday …

However they printed a huge bearish candle on Monday followed by forming a swing high on Tuesday. Granted they did get quite stretched above the 10 day MA and brief sell off would allow the 10 day MA to catch up to price. We will need to watch to see if the Semi’s can find support at either the 10 MA or the 50 MA and form a swing low.

We discussed how the S&P broke out to a new all time high on Monday, but could not hold above the upper megaphone trend line and closed below it. On Tuesday, stocks form a bullish reversal off of support from the declining (red) trend line. A close back above the upper megaphone trend line can be used for a long entry with Tuesday’s low being the stop.