Cycle Trading

PRE-SUMMARY

Stocks signaled a daily cycle decline before reclaiming the 10 day MA. The reversal now supports labeling day 34 as the DCL

Stocks closed below the 10 day moving average on Tuesday to signal the daily cycle decline.  Tuesday marked day 34 for the current daily cycle, placing stocks in their timing band for a DCL.  From a cycle perspective, stocks should have then gone on to turn the 10 day moving average lower as they continued seeking out their DCL – which did not happen.

Instead, stocks formed a swing low and closed back above the 10 day moving average on Wednesday, then followed through higher again on Thursday.  What is clear is that stocks remain in a daily uptrend. Forming a swing low and reclaiming the 10 day moving average indicates a continuation of the daily uptrend and signals a cycle band buy signal. This now has us labeling day 34 as the DCL.

However, reclaiming the 10 day moving average does not eliminate the possibility of near-term consolidation following the recent advance. If stocks continue holding above the 10 day moving average, then it would support the view that day 34 marked the DCL and that the daily uptrend is continuing higher.

Cycle Alignment:

• Bullish