Cycle Trading

Stocks delivered a huge bullish move on Tuesday.

Stocks printed their lowest point on day 38 to place them in their timing band for a daily cycle low. Stocks closed back above the 10 day MA on Monday to signal that day 38 was the DCL. Stocks delivered bullish follow through on Tuesday by closing above the 50 day MA so we will label day 38 as the DCL.

Here is what we will be watching going forward. Stocks are in their timing band for an intermediate cycle low. Notice that RSI 05 embeds in overbought during the advancing phase of its intermediate cycle and embeds in oversold during the declining phase of its intermediate cycle. So one signal that we are watching for is RSI 05 embedding back in overbought – that would signal that stocks have begun the advancing phase on a new intermediate cycle.