Cycle Trading

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The dollar printed its daily cycle low on Tuesday of last week.
The dollar peaked on Thursday, which was day 2.

On Thursday, it looked like the dollar may be on its way to a failed daily cycle.
Then Friday, the dollar reversed higher, tagging the declining cycle trend line
and potentially setting the daily cycle trend line.
I think if the dollar breaks one of the aforementioned trend lines will signal if we will see a new high or get a failed daily cycle.
The dollar’s daily cycle will not enter the timing band for a low for another 11 days.

The weekly chart does not give any clearer picture for the dollar.

The dollar’s weekly cycle count stands at week 6.
After the big reversal that was printed last week, the dollar did manage to close higher this week, yet failed to make a higher high.

The nature of the current daily cycle will likely tell the tail of the weekly cycle.
A break to new highs suggests that this daily cycle will also see new high.
If the current daily cycle fails that will signal the weekly cycle decline has begun.

And a weekly cycle in decline would dovetail into the timing for a yearly cycle low.

Currently the monthly dollar chart has a yearly peak at month 8, which was January.
The dollar formed a monthly swing high and printed a lower low for February.

Now February is kind of a question mark.

A failed daily cycle signaling the weekly cycle in decline supports the notion that the yearly dollar low is still out in front of us.

A break above the 2 year declining trend line would be congruent with February being the yearly cycle low.
A February low would put the yearly cycle at 9 months.

It is worth noting that 8 of the previous 12 yearly lows printed between 9 & 12 months.

A yearly cycle low for the dollar still being out in front of us should be equity and commodity friendly.

The yearly cycle low for the dollar printing in February would certainly be bearish for stocks and commodities.

Stocks

The daily equity cycle stands at day 28 as of Friday.

The current daily equity cycle peaked at day 20, broke through the cycle trend line and bounced at day 25.
Stocks still have another 7 days before entering the timing band for a daily cycle low

Along with the daily cycle in decline, the weekly cycle is also in decline.

The equity weekly cycle peaked on week 26 and formed a swing high on week 27.
The weekly cycle correction typically lasts 3 – 6 weeks.

The monthly equity cycle stands at 6 months.
The previous 2 yearly cycles stretched at 16 & 15 months respectively.
Again, once the nature of the dollar cycle reveals itself should provide clarity to the yearly equity cycle.

Gold

Gold broke up through the declining cycle trend line on Thursday
Just to see a reversal on Friday

Gold could be back testing the trend line break and Friday was day 6.
More follow through to the downside will negate the trend line break and make Friday day 16.

Any positions taken on Thursday or Friday may experience some draw down if the trend line break is negated.  Keep in mind that Gold would then be entering the timing band for a low next week.

When gold does find its low, whether it was last week or will be next week, that low should also mark the weekly cycle low.

Since gold already has a declining trend line break in hand, a swing low with gold breaking above 1680 would confirm a new weekly cycle indicating that Gold may have printed an early 14 week low.

Week 16 begins the timing band for a weekly cycle low.
If gold does make one more push lower tagging the 1600 level and the lower trend line, that would negate the trend line break and very likely be the weekly cycle low.

A break below the rising trend line off July low would indicate that the nature of the gold bull has changed and it would be prudent to exit positions.

Gold’s yearly cycle suggest that the yearly low is already behind us.

Gold’s yearly cycle averages between 11 – 13 months.
Gold just printed a yearly low in December of 2011.

Notice the similarity between the December 2011 yearly low and the June 2006 yearly low.

In both cases, gold formed a monthly swing low and then drifted lower.
Gold did not breach the June 2006 low, it is just that gold did not make a higher high for that year.  Gold waited until the following yearly cycle before making a higher high.

Miners

The Miners sure made things interesting this week.
The previous Thursday the miners gapped down.
This past Thursday, the miners rallied forming a swing low.

The miners need to break the declining trend line to confirm a new daily cycle.

The timing band for a weekly cycle low for the miners is 14 – 20 weeks.

A swing low and a break of the declining trend line will very likely signal a new weekly cycle for the miners.

The miners’ bullish percent index was only lower one in the past 3 years.

Little down side and plenty of upside.

Oil

Oil may have printed a daily cycle low on Tuesday.

Oil did form a swing low last week.

 A break above the accelerated declining trend line & the 50 MA would add to scenario that the daily cycle low is in hand.

A break above 104.24 forms a weekly swing low and a break above the declining trend line helps to confirm that a new weekly cycle is at hand.

CRB

I would like to start out with the weekly chart for the CRB

I think that I was a bit hasty posting the weekly CRB last week.

A closer examination, I feel better with my effort with the weekly CRB chart this week.
Since last March, the CRB has been printing lower weekly lows.
The CRB is in the timing band for another weekly low.

So far the weekly CRB stands the chance of printing a higher low.

Of course, the CRB cannot begin a new weekly cycle unless it begins a new daily cycle.

It appears that Wednesday the CRB printed a daily cycle low at day 24.
Thursday formed a swing low and Friday the CRB broke the accelerated declining trend line.

I would feel more confident that the daily cycle low is behind us with a break of the black declining trend line.

So it looks like we need to wait and see what the markets bring us next week …