Cycle Trading

Stocks formed a bullish reversal on Monday.

The status of the daily cycle has not been clear. In real-time, the rally following the day 33 low closed above the 10 day MA to appear as if day 33 was the DCL. Then stocks broke below the day 33 low on day 40 and formed a lower low on Friday. So it is not clear if Monday’s bullish reversal was day 46 of an extended daily cycle or day 13 of a failed daily cycle. However the bullish divergence on the oscillators point to Monday being day 46, which places stocks deep in their timing band for a daily cycle low. A swing low and a close above the 10 day MA will have us Monday as the DCL. A break above 5838.61 will form a swing low.