Cycle Trading

Summary

• DCL confirmed on day 48
• Close above 10 day MA triggered signal
• Price consolidating between key levels
• 200 day MA acting as resistance
• Watch 10 day MA for trend trigger

Stocks closed above the 10 day moving average last Monday, signaling day 48 as the daily cycle low. That move, combined with a swing low, satisfied the confirmation rule and established the foundation for a new cycle. Since then, price has entered a period of consolidation, trading between the 200 day moving average overhead and the rising 10 day moving average below. This consolidation has allowed the 10 day to turn higher, further reinforcing day 48 as the DCL.

From a cycle perspective, this type of price action is constructive, as it works off the prior decline while building a base within the new daily cycle. However, the market continues to face resistance at the 200 day moving average, which is preventing a sustained upside move. What is clear is that stocks remain rangebound, with resistance overhead and support building below as the 10 day moving average rises.

However, no bullish trending move can be established until stocks are able to secure a close above the 200 day moving average and maintain acceptance above that level. If that occurs, then the market can begin to transition into a new daily uptrend. If not, continued consolidation within this range or even the possibility of a rejection would remain in play.

Cycle Alignment

Daily: DCL confirmed, consolidation within developing cycle