Cycle Trading

Stocks became stretched above the 50 day MA on day 58. The decline into Friday’s DCL allowed the 50 day MA to catch up to price.

Stocks quickly recovered to close back above the upper daily cycle band on Tuesday and then delivered bullish follow through on Thursday, closing at a new all time high. The quick bullish reversal on RSI is characteristic of the advancing phase of an intermediate cycle. If RSI becomes embedded in overbought that will signal a continuation of the intermediate cycle advance.