Cycle Trading

Stocks broke below the previous DCL Monday, day 14. Breaking below the previous DCL forms a failed daily cycle and extends the intermediate cycle decline.

Breaking below the previous DCL should also trigger a 5 to 7 day bloodbath phase as stocks seek to complete their daily cycle decline. Instead stocks delivered a bullish surprise on Tuesday by closing back above the 200 day MA, which shifts the odds that day 31 was not the DCL.

Forming a swing low and closing above the 200 day MA shifts the odds that Monday was the daily cycle low and the Tuesday was day 1 of the new daily cycle. A close above the 10 day MA will have us label day 45 as the DCL. Then a close above the 50 day MA will shift the odds that Tuesday was not only the DCL but the intermediate cycle low as well.