Cycle Trading

Pre-Summary

The daily cycle count had remained uncertain for several weeks as competing scenarios developed. Monday’s price action finally provided the confirmation needed to resolve that uncertainty.

From a cycle perspective, the status of the daily cycle had not been clear—until Monday.

Stocks did not turn the 10-day moving average lower when they printed the day 34 low. Then, when stocks broke below the day 34 low on June 9 (day 48), it was not clear whether that represented day 14 of a failed daily cycle or the final low of the existing cycle.

Following the day 48 low, stocks closed back above the upper daily cycle band to establish a new daily uptrend, indicating that day 48 was the Daily Cycle Low. However, stocks closed back below the 10-day moving average last week and then below the 50-day moving average on Friday, once again calling that interpretation into question.

One reason we did not label a failed daily cycle was that stocks remained in a daily uptrend. From a cycle perspective, trend and cycle condition are not the same. While the price action weakened, the daily uptrend had not ended, so the evidence did not yet support abandoning the bullish framework.

Monday finally provided the clarity we were waiting for. Stocks formed a swing low and closed back above the 10-day moving average. This indicates a continuation of the daily uptrend, signals a cycle band buy signal, and confirms day 12 as a half-cycle low.

What is clear is that cycle analysis is built on confirmation rather than anticipation. Rather than assuming a bullish or bearish outcome, we allow price to provide the evidence before updating our framework of expectations.

Cycle Alignment

Bullish — The daily uptrend remains intact, with Monday’s confirmation supporting continuation of the current daily cycle.