Cycle Trading

Stocks formed a daily swing low on Monday.

After peaking on day 11, stocks printed their lowest point on Friday, day 19.

Half cycle lows can form as late as day 19, but 19 days is normally too early to expect a daily cycle low. The previous daily cycle was stretched at 61 days. Oftentimes a shortened cycle follows a stretched cycle, which allows for the cycle counts to balance out. The decline into the day 19 low retraced to the 61% fib level, which makes me think that stocks did print an early DCL. Since stocks are in a daily uptrend, Monday’s swing low indicates that stocks will remain in their daily uptrend. We will use a close above the declining trend line to label day 19 as the DCL which will trigger a cycle band buy signal.

And a bullish break above the daily cycle trend line would indicate that the bulls are ready to run.