Riding the Storm Out …

October 29, 2012

May your thoughts and prayer be with all of those affected by Hurricane Sandy

The equity daily cycle runs 35 – 45 days from trough to trough.
Friday was day 38 of the daily equity cycle.
Wednesday, when the US markets open back up, will be day 39.

The point being with each passing day the odds of printing a daily cycle low increases.

However, I do not think a daily cycle low will print until equities break below the previous daily cycle low of 1396.
A break below 1396 is the last requirement to fulfill to satisfy conditions for an intermediate cycle low.

Intermediate cycle declines print a low between weeks 20 & 25.
– Last week was week 20 —- check
Usually intermediate cycle declines move below the 10 MA – check.
Intermediate cycle declines form a weekly swing high – check
Intermediate cycle declines break below the weekly cycle trend line – check
The average duration of an intermediate cycle decline is 3 – 6 weeks.
– Currently at 6 weeks — Check
The last condition to be fulfilled is a failed daily cycle.

If the dollar gives us one more surge higher, we may get that.

I believe that it is no coincidence that equities have not breached the previous daily cycle low and the dollar has not formed a weekly swing low.

The dollar still needs to break above 80.42 to achieve this.

The dollar futures were open and printed a new intermediate cycle high on day 8.

If the equity markets were open today we may have seen a sell off in stocks trigging a spike in the dollar, reinforcing the sell off in stocks.

But since the markets were not open, then this is just speculation.

Last week was week 23 for gold’s intermediate cycle.

Gold is in the timing band to print an intermediate cycle low.
Gold may have printed that low last Wednesday, day 20.

Should the dollar spike higher that could cause gold to make one more spike lower.
If that would happen that would likely be very short-lived.
If that were to happen tomorrow, then that would make Tuesday day 24.

I expect one more push on the dollar to print the weekly swing low and cause equities to print a failed daily cycle. Once the dollar rolls over we should see gold rally.

All of the dominoes all seem to be in place …

15 responses to “Riding the Storm Out …”

robert

October 29, 2012

Lm

What is your short term take on the bond market–bonds were up today –do you see much more upside

Thanks Bob

Reply
Blackwell

October 29, 2012

LMT, can you explain to me the significance of the $80.42 level on the $USD? What role did this level play in the last daily cycle and why is it important to break it to confirm this new daily cycle? Thanks, kindly!

Reply
1. likesmoneystudies
  
  October 30, 2012
  
  Blackwell,
  
  80.42 represents the intra-week high the week the dollar printed its intermediate cycle low.
  
  One of the corner stones to cycle theory is the formation of the swing low to identify the trend change.
  
  Breaking above the intra-week high of the week the dollar printed the low confirms a new intermediate cycle.
  
  There are other characteristics of an intermediate cycle low that I have been discussing over the past few weeks and we been on watch for this swing.
  
  What I am beginning to wonder is if the power of Ben’s printing press has not only broken the dollar’s rally, but trumped the dollar’s ability to form a weekly swing low.
  
  Reply
  1. vorfahrt
    
    October 30, 2012
    
    Maybe also the exceptional closure of the US markets “ruptured” the cycles.
  2. likesmoneystudies
    
    October 31, 2012
    
    vorfahrt,
    
    I doubt if the closure of the US markets ‘ruptured’ the cycles.
    Cycles are the manifestation of human emotions and human emotions did not get ‘ruptured’.
    Ben’s printing press has demonstrated in the past a direct impact on the markets and I believe we are witnessing that again.
Big Pimp

October 29, 2012

USD hit $80.41 at 11:25am EST today

Reply
1. likesmoneystudies
  
  October 30, 2012
  
  Big Pimp,
  
  Close, but no cigar 🙂
  
  The intra-day high that I saw was 80.32.
  Perhaps you are looking at the December contract, DXZ12, while I am watching the DXY.
  
  If so, the DXZ12 would need to break above 80.59 to form a weekly swing low.
  
  Reply
jeff the flee

October 29, 2012

LM thankyou for tracking so dilligently. Cycles have given us some very defined expectations as of late, so i just have to ask. What happens if this dollar cycle is right translated? Does the gold cycle just say ” i am my own cycle and when you ( the dollar ) decide to turn down i will start my uptrend?

Reply
1. likesmoneystudies
  
  October 30, 2012
  
  Jeff,
  
  Gold certainly can march to its own drummer.
  If the current dollar cycle were to form as right translated while gold confirmed a new intermediate cycle, I would respect the new gold cycle.
  
  The dollar and gold generally have an inverse relationship. When the dollar tanks, gold tends to experience its best gains.
  
  Reply
Trond

October 29, 2012

Thanks for another excellent report. – Btw the Toront stock exchange was open (as well as other exchanges covering 95% of the world population, ex USA..) and gained about 0.1 %. So possibly the Spx would have done something similar. And the XGD.TO which is the eq of Gdx gained 0,33%, with a little interesting intraday reversal. Since all the major gold companies are Canadian (Toronto is the international ‘mining hub’), it could very well be substituted for the cycles when the Nyse is closed. (Goldcorp and Barric made 1,25% and 2,5% gains today).
http://stockcharts.com/h-sc/ui?s=XGD.TO&p=D&b=5&g=0&id=p50639928908

Reply
1. likesmoneystudies
  
  October 30, 2012
  
  Trond,
  
  Thank you for the global perspective.
  I acknowledge that I am afflicted by a US-bias.
  Miners usually rally ahead of equities and with Goldcorp & Barric printing those impressive gains, it may be game on for the Miners!
  
  Reply
jeff the flee

October 30, 2012

what are the odds of gold going 28 weeks long for this IC bottom. i am looking for impossible for a answer =)

Reply
1. likesmoneystudies
  
  October 30, 2012
  
  Jeff,
  
  I believe there was one weekly cycle since the 2008 low that exceeded 27 weeks.
  
  So I would say about 2% odds.
  
  Reply
  1. jeff the flee
    
    October 30, 2012
    
    close enough . thankyou
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