Cycle Trading: Bullish Expectations
|We have been discussing the status of the daily equity cycle in regards to whether day 45 hosted a daily cycle low. Last week we listed what needed to occur for us to change the labeling.
Last Thursday we outlined that the daily cycle is extended past day 45 if the following occurred:
* If RSI broke below the dashed blue line
* Stocks close below the upper daily cycle band
* Deliver a bearish TSI Zero Line Crossover
Since two of the three has now happened that has now shifted my thinking that this is an extended daily cycle with Tuesday being day 59.
RSI has now made a lower low and the TSI has delivered a bearish zero line crossover. Both signal that stocks are now declining into their daily cycle low. With a peak on day 54 this is an extremely right translated daily cycle. We should see stocks break below 2566.33 in order to complete its daily cycle decline. Stocks are currently very late in their timing band for a daily cycle low and have already corrected for 5 days. So a swing low and a break above the declining trend line will confirm a new daily cycle.
The big picture is that stocks are in a daily and weekly uptrend. They will remain in their uptrend unless the close below the lower cycle band. Therefore a swing low above the lower cycle band will be a buy signal.
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