Cycle Trading

The advancing phase of the intermediate cycle is characterized by RSI 05 embedding in overbought and delivering quick bullish reversals once oversold. Stocks on Tuesday are beginning to show a change of character.

Instead of a quick bullish reversal, RSI 05 once again became oversold and is beginning to embed there. The previous 2 times that stocks tested the 50 day MA, dip buyers were rewarded with a continued rally. Stocks are still in a daily uptrend. If stocks form a swing low above the lower daily cycle band then they will remain in their daily uptrend and trigger a cycle band buy signal. However, a close below the 50 day MA would be another change in character that would signal the daily and intermediate cycle decline.