Cycle Trading

Pre-Summary

Stocks formed a swing low on Friday, but Day 16 is early for a normal Daily Cycle Low. With the daily uptrend still intact, the developing structure raises the possibility that Stocks are forming a half-cycle low instead.

Stocks formed a swing high and closed below the 10 day MA on Monday. Stocks then broke below the recent consolidation level on Tuesday, Day 14, to signal the daily cycle decline. Stocks initially found support near the 7700 level and formed a swing low on Wednesday. However, that reversal failed to deliver bullish follow-through and Stocks resumed their decline.

Stocks formed another swing low on Friday. The important consideration is that Friday was only Day 17. That is early for Stocks to complete a normal Daily Cycle Low. Stocks are also currently in a daily uptrend. That raises the possibility that Day 16 may be developing into a half-cycle low rather than the completion of the Daily Cycle.

A close above the 10 day MA will indicate a continuation of the daily uptrend and signal a cycle band buy signal. In which case, we would label Day 16 as a half-cycle low.

A rejection by the 10 day MA would leave the daily cycle decline unresolved.

Current Framework

Trend: Daily uptrend.

Cycle: Day 16 is a possible half-cycle low.

Next Trigger: Close above the 10 day MA signals continuation and would label Day 16 as the half-cycle low.