Cycle Trading

Historically, the dollar’s intermediate cycle prints a low about every 18 – 22 weeks.

I believe that the dollar did that on 9/14 but has been unable to confirm the new intermediate cycle

We see that on day 15 the dollar printed what looks to be a daily cycle low.
At 15 days it is 3 days shy of the normal timing band for a daily cycle low.
One of the key things to observe is that the dollar broke below the 79.50 level to print that swing low.

Fast forward to this week.
The dollar rallied Monday through Wednesday
Thursday the dollar reversed lower and Friday made a lower low.
But then on Friday, the dollar tagged the 79.50 level and then reversed higher.
The dollar may have just established the daily cycle trend line.
A break above Thursday’s high of 80.21 would confirm this view.

Again we see that the second week in September looks like an intermediate cycle low. It has been 4 weeks and the dollar has not been able to break out of this range.

Breaking above 80.42 and the declining cycle trend line confirms this as week 4 of a new intermediate cycle.

If the dollar continues lower and breaks below 78.60, that confirms this week as week 23 and the dollar is still in search of its intermediate cycle low.

One comment here is that it appears that Bernanke played his hand too early.
By not allowing the dollar to bottom first before unleashing his printing press has the dollar struggling to confirm an intermediate cycle low.
Due to the weak nature of the rally, once an intermediate cycle is confirmed, I expect the dollar to quickly roll over.

October is month 8 for the yearly cycle.
The dollar has already broke below the three year trend line.
Once the dollar rolls over, I believe that the dollar will break below the yearly cycle low of 78.09.

Stocks

Friday was day 28 for the equity daily cycle.

Since the dollar bottomed on day 15 last Friday, Stocks have been selling off.
Stocks continued to sell off even as the dollar printed three straight lower closes to end last week.

The equity daily cycle peaked on day 8 and retested the high on day 23. Stocks convincingly broke through the daily cycle trend line on day 25 and now are seeking out its daily cycle low.
The timing band for a low is from day 35 – to 45. That suggests another 7 to 17 days of trending lower.

The equity weekly cycle peaked on week 14 and it is currently on week 18.

Stocks did form a weekly swing high this week.
A break below the intermediate cycle trend line will confirm an intermediate cycle decline.

October is month 4 of the yearly cycle.
The yearly cycle currently shows a peak on month 3.

Something to keep in mind is that the 4 year cycle stands at month 43.
Equities are nearing the timing band for a 4 year cycle decline.
I think that we will see the current intermediate cycle print a bottom and then see equities rally into a new intermediate cycle.

I think that this next intermediate cycle could be at risk for forming as left translated, leading to a yearly and 4 year cycle decline.

Gold

Gold’s daily cycle peaked last Friday on day 7.

As the dollar rallied last week, we saw gold sell off.
Gold formed a swing high and broke below the daily cycle trend line on Monday.

Gold closed below the 1760 level on Friday.
This was the first time in 20 days, besides that last daily cycle low, that saw gold close below this level.
With gold’s daily cycle running from 18 – 28 days, that leaves another 6 to 16 days for gold to trend lower.

The weekly cycle is beginning to become more defined.
The weekly cycle printed a swing high this week.
A break below the weekly cycle trend line confirms that gold has entered its primary intermediate cycle decline putting the weekly count at week 21.
Gold’s intermediate cycle timing band runs from week 17 to week 25 suggesting that once a daily cycle low is printed, then an intermediate cycle low will print as well.
Something to watch for is that gold typically breaks below the 10 week moving average when printing its intermediate cycle low.

The yearly cycle shows gold at month 5.
Gold is currently consolidating the 4 plus month run.
Once an intermediate cycle low is printed, I expect gold to break through the 1800 level.

Miners

The Miners daily cycle peaked on day 3 and retested the high last Friday, day 7.

Like gold and equities, last Friday saw the Miners print a reversal.
Monday saw a break of the daily cycle trend line.
The Miners are now seeking out their daily cycle low.
You will see on the weekly chart that the Miners have broken below the intermediate cycle trend line to confirm that this is an intermediate cycle decline.
Therefore I expect to see a break below the previous daily cycle low of 490.
That will mean this is a failed daily cycle, which is the hallmark of an intermediate cycle decline.

The intermediate cycle peaked on week 18 and formed a swing high on week 19.

As previously stated, this week saw the Miners break below the intermediate cycle trend line confirming an intermediate cycle decline.
The Miners are already in the timing band to print an intermediate cycle low. The next daily cycle low should also mark the intermediate cycle low.

The yearly cycle shows a current peak of 4 months with October being month 5.
The 520 level begins a resistance zone.
The Miners will need a new set of weeks that a new intermediate cycle brings in order to work through this congestion level.

CCI

The CCI index peaked last Tuesady, which was day 4 and formed a swing high on day 5.

 

 
 
Last Friday saw the CCI break below the daily cycyle trend line signaling a daily cycle decline.
 The CCI conituned to sell  off this week.
Barring some type of dramatic flush, the previous daily low should not get tested.

A weekly cycle low looks to have printed on week 16.
This week appears to be week 2 of a new intermediate cycle.
Should the CCI break below the week 16 low,
then I would reconsider labeling this week 2.
 

 
 
The CCI has been struggling to break through the declining three year cycle trend line.

Once the dollar’s new intermediate cycle rolls over I expect to see the CCI break to new highs.
 
Bonds

last Friday was day 15 for the daily bonds cycle.
Bonds appears to have printed a daily cycle low last Friday.
 

 

A swing low formed on Monday and bonds rallied through out the week.
Thursday saw bonds break above the decline cycle trend line confirming a new daily and what looks to be a new intermediate cycle.
 

 
 
The intermediate bond cycle printed a weekly low back in  April and peaked on week 18 in July.
Bonds looks to have printed an intermediate cycle low on week 21.
A trend line break a swing low formed two weeks later.

Bonds dropped after that forming a lower low on week 25,
so this week is possibly week 8.

Because bonds broke above the declining weekly cycle trend line ( after forming a weekly swing low) I am more inclined to view week 25 as the weekly cycle low making this week 4 of the new intermediate cycle.

 
 
 Even though bonds confirmed a new intermediate cycle, the yearly cycle is in decline.
 
The yearly cycle peaked in July, which was month 4.
A swing high formed in August and September saw more follow through.
Since bonds are caught in the grip of a yearly cycle decline, I do not anticipate the current daily cycle to rally much further.