Cycle Trading

Pre-Summary

The Daily Cycle Low has now been signaled. The next challenge is allowing the new uptrend to develop without becoming too stretched.

Stocks printed their lowest point on Day 34, placing them in the Daily Cycle Low (DCL) timing band. Thursday’s close above the 10-day MA was followed by a swing low and a close back above the 50-day MA on Friday, signaling Day 34 as the DCL.

Monday delivered bullish follow-through, with stocks closing above the upper daily cycle band. That signals an important change in market structure by ending the daily downtrend and beginning a new daily uptrend.

The rally has also reclaimed the 50-day MA. However, it has become stretched above the 10-day MA as it hits resistance near the 7600 level. Some consolidation is likely, which would allow the 10-day MA time to catch up to price.

Current Framework

Trend: Daily uptrend.

Cycle: Day 34 signaled as the Daily Cycle Low.

Next Trigger: Holding above the 10-day MA favors continuation after consolidation.