Cycle Trading: A Low is Nigh
|The daily equity cycle peaked on day 40, formed a swing high and began its daily cycle decline. Thursday's bullish reversal could mark the daily cycle low.
Thursday was the lowest point following the day 40 peak. At 46 days stocks are deep in their timing band to print a daily cycle low. Thursday's bullish reversal has eased the parameters for forming a swing low. A break above 2369.08 forms a swing low and has good odds to mark the daily cycle low.
Normally we would like to see break below the daily cycle trend line before looking for a daily cycle low. But this daily cycle is extremely right translated and it does not look like the daily cycle decline will break the daily cycle trend line.
Setting aside the trend line break there are other signals that help to determine a daily cycle low. Timing band is one of the criteria. Seeing the TSI deliver a bearish zero line crossover and the formation a weekly swing are normally present as stocks decline into a daily cycle low.
And stocks have formed a weekly swing.
The is week 18 for the intermediate equity cycle. Stocks have entered their timing band to seek out an intermediate cycle low. With a right translated daily cycle formation assured, stocks will need one more daily cycle in order to complete the intermediate cycle decline. Allowing 6 - 8 weeks for the completion of one more daily cycle will take the intermediate cycle deep into its timing band for an intermediate cycle low. Therefore we will watch for signs that the impending new daily cycle will form as a left translated, failed daily cycle.
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