Cycle Trading

Friday saw the dollar break above Thursday’s low to form a swing low.

The dollar also broke above the declining trend line to confirm Friday as day 1 of the new daily cycle.

The expectation for this daily cycle that followed a right translated daily cycle is to print a higher high.

The current weekly cycle just completed week 14.

Since a new daily cycle just started, it is not likely to find its daily cycle low for another 4 – 6 weeks. That will bring the weekly cycle to 18 – 20 weeks, which is right in the timing band for an intermediate cycle low.

Therefore there is a good likelihood this new daily cycle will be the terminal daily cycle for the current weekly cycle.

Keep in mind that the final daily cycles usually are failed, left translated cycle.

This sets up an expectation for this new daily cycle to peak by day 12, and probably before. And once it peaks, the decline into the daily cycle low will print below the previous daily cycle low.

The current intermediate cycle peak is week 13. If the new daily cycle does print a higher high that will then push the weekly cycle peak to later in the cycle, all but guaranteeing this to be a right translated weekly cycle. The expectation for this intermediate cycle would then print a higher weekly low than the previous weekly cycle.

The yearly cycle stands at month 4.

The yearly low was a stealth low printed in February.
The dollar coiled for two more months before exploding higher.
These year end coils happen frequently enough. Over the past 15 years the occurred 8 times.

The dollar is currently on month 13 of the three year cycle.

The dollar is still in the process of printing higher monthly highs.
That is probably why the CRB Index has not yet found its three year low.

Stocks

Equities printed a low on Monday and formed a swing low Tuesday.

They had a clear and convincing trend line on Thursday and a successful back test on Friday, which was day 4.

Despite the fact that Friday was day one of the new dollar cycle, stocks demonstrated good strength rallying from the early session lows.

I still have a concern that the SPY topped the Selling on Strength again.
I do not remember equities emerging from a daily (and very likely an intermediate) cycle low topping the SOS 4 straight days. That’s over 1 billion in selling on strength since 5/21.

Maybe that is speaking to the uncertainty over Spain and Greece and the Fed and waiting for confirmation of the can getting kicked down the road again …

Stocks just printed week 35 of the current intermediate cycle.

Since a lower low was printed this week, the earliest a weekly swing low can print will be next week.

Since equities closed near the top of the weekly candle, just a bit of strength forms a weekly low and will deliver a weekly trend line break confirming a new intermediate cycle.

The yearly equity cycle shows stocks at month 8.

It does appear that equities are in the process of leaving behind an early yearly low.
If stocks are due for a 4 year low, a brief monthly rally followed by an extended monthly sell off would be fit this scenario.

I have to say that the dollar continuing to rally to a three year high would also fit this scenario.
Should Ben intervene with some form of QE, then that will likely tank that dollar rally and extend out the equity four year low.

Gold

The dollar has rallied for 10 out of the 16 days of the current daily cycle for gold.

Despite such dollar strength gold has found solid support
Gold appear to be establishing a solid base to launch from once the dollar begins its intermediate cycle decline.

Gold has printed week three of the new intermediate cycle.

While the gold shows a trend line break to confirm the new weekly cycle I would like to see a follow through week.

A follow though week would help to clarify the yearly cycle.

So far June looks more like month 17 instead of month 1 of a new yearly cycle
A swing low and a clear trend line break will confirm a new yearly cycle.

I will comment that a case can be made that December (a) was a (deceptive) yearly cycle low. It was hard to distinguished because it was camouflaged by this on-going consolidation.

The Miners

Friday was day 16 for the Miners daily cycle.

This week the Miners printed a peak on Wednesday and on Friday tagged the daily cycle trend line. The trend line held so it appears that the Miners will put in another leg up for this daily cycle.

The weekly cycle has the Miners at week 3. This is the first intermediate cycle emerging from a three year low. The expectation is for this intermediate cycle to form as right translated.

All right translated intermediate cycles since the 2008 low (except one) peaked on or after week 12. The point being is we can expect another 9 or more weeks for this rally. The last three year low did see the miners rally for 18 weeks before declining into an intermediate cycle correction.

Something that went unnoticed this week (until now) was that the Miners printed a monthly swing low.
A new yearly cycle cannot begin unless a monthly swing low is printed.

I decided to work up a bonus chart to try and map out how I think the Miners will track over the next year.

So hang on and enjoy the ride …