Stocks formed a swing high and closed below the 10 day moving average on Thursday, which calls into question whether day 20 truly marked the daily cycle low (DCL).
Thursday’s swing high may simply be a gap fill from Monday’s rally rather than a true reversal. However, attention now turns to the 50 day moving average, which has provided consistent support since the yearly cycle low back in April. A close below the 50 day moving average would indicate that day 20 was not the DCL, suggesting that stocks are still in the process of completing their daily cycle decline.
For now, stocks remain in a daily uptrend. They will stay in their daily uptrend unless they close below the lower daily cycle band. As long as that band holds, the larger trend remains intact — but the coming sessions should clarify whether this is a short-term consolidation or the beginning of a deeper decline.
Cycle Trading 
Leave a comment