Cycle Trading

Pre-Summary

Yesterday we discussed the competing daily cycle scenarios developing in stocks. Tuesday’s decline shifted the focus to the 50-day moving average, where the bulls are now attempting to defend the daily uptrend. The next confirmation signal should determine which cycle scenario ultimately prevails.

Yesterday we discussed how stocks were consolidating above the 10-day moving average while competing daily cycle scenarios remained in play. Tuesday’s decline changed the short-term picture as stocks closed back below the 10-day moving average. However, the bulls managed to defend the 50-day moving average, leaving the daily uptrend intact.

From a cycle perspective, the market has reached an important decision point. The bullish scenario remains valid, but confirmation will be needed. A swing low followed by a close back above the 10-day moving average would preserve the daily uptrend, while a break above 7,424.17 would confirm the swing low and generate a cycle band buy signal. This would continue to support day 48 as the Daily Cycle Low.

However, the bearish scenario continues to develop beneath the surface. A close below the 50-day moving average would indicate day 34 was the Daily Cycle Low, making Tuesday day 23 of a failed daily cycle. This would signal increasing downside pressure while shifting the daily cycle outlook to the bearish scenario.

What is clear is that the bulls are making their stand at the 50-day moving average. The daily uptrend remains intact, but confirmation will determine whether buyers regain control or the failed daily cycle scenario takes precedence.

Cycle Alignment

Mixed — The daily uptrend remains intact, but the battle between the bullish and bearish daily cycle scenarios continues.