Cycle Trading

Pre-Summary

Stocks have broken out of their recent consolidation and remain in a daily uptrend. But the daily cycle has now begun to decline, shifting attention back toward the 7600 breakout level for possible support.

Stocks Begin Their Daily Cycle Decline

Stocks broke bullishly above the 7600 resistance level earlier this month and went on to consolidate below 7800.

Stocks formed a swing high and closed below the 10-day MA on Monday. They delivered bearish follow-through on Tuesday by breaking below the recent consolidation level, signaling the daily cycle decline.

We will now be watching the 7600 breakout level for possible support and the formation of a half-cycle low. The peak on Day 11 also leaves open the possibility of a left-translated daily cycle formation. How Stocks respond as they approach support should provide additional evidence regarding the structure of the current daily cycle.

Despite the developing daily cycle decline, Stocks remain in a daily uptrend.

Stocks will remain in their daily uptrend unless they close below the lower daily cycle band.

Current Framework

Trend: Daily uptrend.

Cycle: Daily cycle decline signaled following the Day 11 peak.

Next Trigger: Watch the 7600 breakout level for support and the possible formation of a half-cycle low. A close below the lower daily cycle band would end the daily uptrend and begin a daily downtrend.