Cycle Trading

PRE-SUMMARY

Yesterday we noted that sellers had failed to deliver meaningful bearish follow-through. Today’s reversal from support is beginning to reinforce that view.

In yesterday’s post, we noted that stocks had signaled a daily cycle decline but failed to deliver bearish follow-through. That left open the possibility that an extended daily cycle was still in the process of forming.  Stocks initially moved lower on Tuesday. Day 48 places the market deep in its timing band for a daily cycle low. However, sellers were unable to maintain control. Stocks reversed higher from a previous most traded zone while also finding support above the rising 50 day moving average.This signals that buyers remain active at an important area of support. The reversal also eases the requirements for forming a swing low.

From a cycle perspective, stocks remain in a daily uptrend. A swing low and close above the 10 day moving average would indicate a continuation of that uptrend and signal a cycle band buy signal. In that event, we would label day 48 as the daily cycle low. Confirmation will be needed. A break above 7483.15 will form a swing low. For now, the daily cycle decline remains the active signal. However, support held where it needed to, and the focus now shifts to whether buyers can complete the process of signaling a new daily cycle.

CYCLE ALIGNMENT

Bullish