Dollar Turning Point …

June 7, 2012

Thursday was day 26 of the dollar’s daily cycle.

Due to the dollar being late in the timing band for a daily cycle low, our expectation was for a brief decline into a cycle low. And it looks like the dollar printed a reversal on the fourth day of its decline.

A break above 82.39 will from a swing low and very likely signal a new daily cycle.

The average dollar daily cycle lasts around 4 – 6 weeks.

The dollar’s weekly cycle currently stands at 14 weeks.

A new daily cycle should take the weekly cycle right to weeks 18 – 20, which is in the timing band for an intermediate cycle low.

So the expectation is that this new daily cycle will be the concluding daily cycle to the intermediate cycle. Terminal daily cycles are characterized by being left translated failed daily cycles. Therefore the expectation for this new daily cycle is to peak before 12 days and quite likely by day 8.

Equities looked to be sniffing out a dollar bottom.

Thursday was day 3 for the new equity daily cycle. Stocks managed to poke above the declining trend line to confirm a new daily cycle. The equities sold off for the rest of the day printing a reversal.

Also it is worth noting that the SPY for the third straight day topped the Selling on Strength list today.

It’s strange. Usually a new intermediate cycle is characterized by large Buying on Weakness days prior to the daily cycle low.

To recap, Tuesday the SPY printed a mild 71 million, and Wednesday printed 263 million. That was followed up by 81 million today.
Now add that to the 58 Million SOS on 5/21, 222 Million SOS on 5/22,  142 Million SOS on 5/24 and 155 million on 5/30 totals to 884 million SOS over the past week couple of weeks.Y
Considering this, I would not rule out one more test of the lows.

Thursday was day 15 for the Miners.

Even though the Miners were down big (3.26%), the daily cycle trend line remains intact.

A reversal higher would be very bullish for the Miners.
A break of the daily cycle trend line would lead to the Miners declining into a daily cycle low.

If the dollar plays out as anticipated by printing a brief new high on the daily cycle then rolling over quickly, that should take the Miners squarely in their timing band for a daily cycle low.

As long as the Miners hold above the previous low,
this anticipated low would be an excellent opportunity to add.

7 responses to “Dollar Turning Point …”

Rob L

June 7, 2012

Thanks, LM- clear and to the point.,,love it.

Reply
hamvestor

June 7, 2012

“As long as the Miners hold above the previous low…” Which low are you referring to? 407? 370?

Reply
1. likesmoneystudies
  
  June 8, 2012
  
  “As long as the Miners hold above the previous low…”
  
  That should have read “As long as the Miners hold above the previous daily cycle low…” 🙂
  
  Which was the 372.73 May 16th low.
  
  Reply
StemSki

June 8, 2012

Hi LM,

I had written a good post and then I did something to erase the whole thing, so now I have to make this one short and to the point.

From last year (Dec 2010 to August 2011) the daily cycle for stocks lasted 43 (ended in January), 38 (ended in March), 43 (ended in May), and 42 days (ended in July). The last one was a failed daily cycle. The next one peaked on day 4 and it too was a failed cycle

This year (October 2011 thru today) the cycles lasted 37 (ended in November), 43 (ended in January), 49 (ended in April) and 38 days (ended in June). The cycle was a failed daily cycle.

What is the probability that this daily cycle will be left translated as well as a failed daily cycle?

It looks like the last intermediate cycle was also a failed cycle. I try to draw the best trend line I can and I see the new weekly cycle starting about 8 weeks ago. I could have picked the cycle bottom on Week 22 but it does not look like a trend line break.

Last April, the intermediate cycle peaked on week 2 and this year it looks like the cycle peaked on week 3.

Am I way out in left field?

Here is a link to the weekly chart I threw together. I can post link from work. Sorry

http://stockcharts.com/h-sc/ui?s=$SPX&p=W&yr=2&mn=3&dy=0&id=p31392984112&a=269136634

Aaron

Reply
1. StemSki
  
  June 8, 2012
  
  Looks like I lied. I can post the link
  
  Reply
  1. StemSki
    
    June 8, 2012
    
    I meant to say that the last daily cycle this year was a “failed” daily cycle. I left out the word “failed”
2. likesmoneystudies
  
  June 9, 2012
  
  Aaron,
  
  Thanks for posting the link to your chart.
  
  It is always interesting to compare notes.
  
  I see that our charts are quite similar regarding interpretation.
  
  Where we differ is how I like to account for cycles.
  
  I look for a swing high and a trend line break in the timing band for a weekly low.
  
  I then label the lowest point following the cycle high as my cycle low.
  
  So in June you appear to have labeled the June 13th low as an intermediate cycle low at week 14.
  
  In real time it did look like one to me as well, minus it not being in the timing band.
  
  I soon realized that was not an intermediate cycle low.
  
  Then I remember that early August low had me thinking an intermediate cycle low was printed.
  
  But equities normally explode out of an intermediate cycle low and it became clear to me that was not happening, so I re-phased the IC low to October
  
  Now the April 9th low is definitely in the timing band for an intermediate cycle low.
  
  However the rally from the 4/9 low is not what I would characterized as a rally out of an intermediate cycle low.
  
  The other thing was the 4/9 low did not break the trend line drawn off the October and November swing lows, so I view this as an extended cycle.
  
  By not labeling the April 9th swing as an intermediate cycle low keeps the weekly count at 35, which is late in the timing band for a low.
  
  However, it sets the expectation of this week printing the long-awaited weekly cycle low.
  
  Reply