Cycle trading: Stocks going vertical
|Stocks continue to break out to new highs.
Since breaking above the 3975 resistance level stocks appear to be going vertical.
Monday was day 21 for the daily equity cycle. The new high on day 21 shifts the odds towards a right translated daily cycle formation. However, stocks are becoming stretched above the 10 day MA. Stocks will need to consolidate at some point to allow the 10 day MA to catch up to price. But if stocks too stretched above the 10 day MA we could then there will be a risk of a sharp correction. We will use a swing high and a break below the accelerated (blue dashed) trend line to signal the daily cycle decline.
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