Stocks End Their Daily Uptrend

Pre-Summary

Stocks entered their Daily Cycle Low timing band on Day 30, but the more important development came when they closed below the lower daily cycle band. That signal ended the daily uptrend and marked the beginning of both a daily downtrend and the Intermediate Cycle Decline.

Stocks printed their lowest point on Day 30, placing them in their timing band for a Daily Cycle Low (DCL). They have since begun to consolidate below the 10-day MA, allowing the 10-day MA time to catch up to price. A close above the converging 10-day MA and 50-day MA will signal Day 30 as the DCL.

However, Thursday produced the more important technical development. Stocks closed below the lower daily cycle band, ending the daily uptrend and beginning a daily downtrend. This also signals that the Intermediate Cycle Decline has begun.

This illustrates an important principle of cycle analysis. A market can enter its timing band for a Daily Cycle Low while the trend continues to weaken. Timing identifies where a cycle low may develop, but price action determines when that low is signaled. If Stocks are rejected by the converging 10-day MA and 50-day MA, that will indicate a continuation of the daily downtrend and signal a cycle band sell signal.

Cycle Study

Cycle Study: When Trend Changes Before the Cycle Low

One of the most common misconceptions is that entering a Daily Cycle Low timing band automatically means the decline is over. — It does not.

The timing band tells us where to begin looking for a Daily Cycle Low. The trend tells us whether buyers have actually regained control.

In this case, Stocks entered the timing band but then closed below the lower daily cycle band. That ended the daily uptrend and began a daily downtrend before the Daily Cycle Low has been signaled.

This is why cycle analysis separates timing from confirmation. Timing narrows the window. Price action provides the evidence.

Current Framework

Trend: Daily downtrend.

Cycle: Day 30 remains the candidate Daily Cycle Low.

Next Trigger: A close above the converging 10-day MA and 50-day MA will signal the Daily Cycle Low. Rejection at those moving averages favors continuation of the Intermediate Cycle Decline.

Cycle Trading