Cycle Trading

Summary

• Stocks formed a swing low and reclaimed the 6900 level on Monday
• Bullish follow-through followed on Tuesday
• Stocks ran into resistance at the 7000 level on Wednesday
• A bearish reversal formed at resistance
• Day 29 places stocks in the early part of the DCL timing band
• Stocks found support at the 10 day moving average on Thursday
• Daily uptrend remains intact
• 7000 remains key upside resistance; 10 day moving average is near-term support

Stocks formed a swing low and closed above the 6900 resistance level on Monday. That move was confirmed with bullish follow-through on Tuesday. However, stocks ran into resistance at the 7000 level on Wednesday and formed a bearish reversal.

Wednesday marked day 29 for the daily cycle, placing stocks in the early part of their timing band for a daily cycle low (DCL). While stocks did form a swing high on Thursday, they found support at the 10 day moving average and managed to close higher on the day.

A close below the 10 day moving average would signal the daily cycle decline. For now, stocks remain in a daily uptrend. A decisive bullish break above the 7000 level would indicate a continuation of the daily uptrend and signal a cycle band buy signal.