Cycle Trading

Stocks broke below the day 33 low on Thursday.

When stocks closed above the 10 day MA on 12/24, we labeled day 33 as the DCL. We were expecting stocks to then deliver bullish follow through and turn the 10 day MA higher as they rallied out of the day 33 low — which did not happen. Stocks not turning the 10 day MA higher, along with the bullish divergence on the oscillators, indicate that stocks extended their daily cycle decline. That will make Thursday day 40, which would place stocks deep in their timing band for their DCL. Stocks are currently in a daily downtrend. They will remain in their daily downtrend unless they close back above the upper daily cycle band.