Cycle Trading

Summary

• Ceasefire news drives gap higher
• Break above 50 day and 200 day MA
• Upper cycle band breakout
• New daily uptrend confirmed
• Watch consolidation above 50 day MA

Following up on the prior post “Stocks Consolidate After DCL — Await Breakout Signal,” stocks have now delivered that breakout. The announcement of a 2-week ceasefire in the US-Iran conflict triggered a gap higher on Wednesday, pushing price above both the 50 day and 200 day moving averages. Stocks also closed above the upper daily cycle band, which from a cycle perspective ends the prior daily downtrend and signals the start of a new daily uptrend. This move also confirms that the intermediate cycle low (ICL) has been set.

What is clear is that stocks have shifted into a new daily uptrend, supported by a decisive move through key resistance levels. However, price is now stretched above the 10 day moving average. Stocks have begun to consolidate above the 50 day moving average, which is constructive and should allow the 10 day to catch up to price.If stocks can maintain acceptance above the 50 day moving average, then the breakout remains intact and the uptrend can continue to build. If not, a move back into the prior range or a deeper consolidation would remain in play. The implications for the intermediate and yearly cycles will be discussed in more detail in the Weekend Report — but the shift in trend is constructive.

Cycle Alignment

Daily: Uptrend confirmed, ICL established