Cycle Trading

Friday the dollar did two things of significance from a cycles perspective.

1st the dollar printed a higher high that negated day 8 as the daily cycle peak.
With a the current peak on day 12, this shifts the odds towards this second daily cycle forming as a right translated cycle.

The second thing of significance the dollar did today was confirm a weekly swing low.

This is week 7 of the dollar intermediate cycle.
The dollar finally broke above the intra week high of the low printed in September.
That delivers final confirmation of a new intermediate cycle.
This has been very unusual intermediate cycle.
The dollar normally forms a weekly swing low within one to two weeks of the intermediate cycle low.
Prior to this intermediate cycle, the dollar has never needed more than three weeks to form a weekly swing low.

This has been a very weak intermediate cycle.
The last intermediate cycle tacked on over 5 points in 5 weeks time.

The current intermediate cycle has only managed 2 points in 7 weeks time.

The yearly cycle is in decline bringing an expectation of left translated intermediate cycles printing lower lows.
That means that we are looking at either this week or next week as marking the cycle peak.

The yearly cycle peaked on month 5 and formed a swing high on month 6 and has been in decline.
The yearly cycle typically runs 8 – 15 months from trough to trough suggesting another 1 – 6 months to decline into a yearly cycle low.
A break above the declining yearly cycle trend line would suggest that a (an early) month 7 yearly cycle low printed.

The odds of September hosting an early 7 month yearly cycle low are small.
Only one time since 1978 has the dollar’s yearly cycle run only 7 months.
That happened in 2006 which was in the 5 th and final three year cycle of a 15 year super cycle as the dollar declined into a 15 year low.

Stocks

Stocks appeared to have printed a 38 day daily cycle low last Friday.

Stocks formed a swing low on Thursday and Friday could be day 3 of the new daily cycle.

Stocks managed to print a higher daily cycle high on Friday before being rejected by the 50 MA.
A downside break of the mini bear flag forming could see stocks take out the previous dcl of 1396.56
A bearish resolution would mean Friday was day 42.
Stocks still have three more days left in the timing band
so it is possible to see one more push lower which takes out the previous daily cycle low.

Such a move below 1396 would add definite clarity to the cycle counts

The intermediate cycle sits at either week 21 or week 1.
Last week low was week 20, right in the timing band for a intermediate cycle low.
So far this corrections passes all the criteria necessary for marking an intermediate cycle low sans a failed daily cycle.

Generally speaking, intermediate cycles tend to explode out of the low forming a weekly swing low on week 1.
That did not happen this week further supporting the notions that Friday was day 42.

October was month 4 for the yearly cycle.
Once a new intermediate cycle is confirmed, it should last 5 or 6 months.
That would bring the yearly cycle to month 9 or 10, in the timing band for the next yearly cycle low.

Gold

Like equities, gold formed a mini bear flag over the past week.
Of course gold broke to the down side in a panic sell off on Friday.

Gold either printed a failed daily cycle Friday or the panic sell off was part of an extended daily cycle.

A failed daily cycle means that gold is on day 7 with a potential 3 more weeks of downside.

An extended daily cycle would mean that gold is on day 27.

The fact that equites also are threatening an extended daily cycle supports this view.

I think the key will be the dollar.

If, in fact,the yearly dollar cycle is still in decline, then the dollar will need to roll over soon or
it will break through the declining yearly cycle signaling a new yearly cycle.

If the dollar breaks up through the declining yearly cycle trend line that would shift the odds to Friday being day 7.

Gold’s weekly cycle also points to this being an extended daily cycle.

Gold’s weekly cycle printed week 24.
Gold’s weekly cycle runs 17 – 25 weeks so gold is still in the timing band to print a low.
I would like to see a small break to the downside that reverses into Friday.
That would ease the parameters for gold to form a weekly swing low the following week.

If Friday was day 7, that would take gold’s weekly cycle out to week 28, which is a low probability event.

Looking that the monthly picture for gold, this pattern emerges:

The monthly 20 MA has held support for gold except for the 8 year low and now the 4 year low.
Notice that emerging out of the 8 year low, gold back tested the 20 MA before continuing the rally

In fact the set ups are so similar.
Three tests of a significant level followed by the 20 MA backtest.

The Miners

I would like to start off with last weeks daily chart.

Last week, the HUi formed a swing low off the day 20 low.
Last Friday held the possibility of being day 2.
What was needed was a break of the declining cycle trend line.

The Miners delivered a head fake on Wednesday.
The Miners are on day 25 of the daily cycle and should print a low any day (maybe Tuesday)

Oh those tricky Miners …

The Miners rallied enough to form a weekly swing low …

… sucking in those who jumped in before waiting on confirmation via the declining cycle trend line break.

But stopped short of breaking the weekly declining trend line and then printed a lower low…

… therefore punishing those who jumped in early.

We are still awaiting a weekly swing low and trend line break to confirm a new intermediate cycle.

At 24 weeks, the Miners are getting deep into the timing band for an intermediate cycle low.

We see the Miners still backtesting the yearly declining cycle trend line.
If this Bull is still alive and kicking, then this trend line should hold.

Keep in mind that the Miners printed a red candle 14 of the 35 months as they rallied out of the 2008 low to the all time high.

The CCI

Friday was day 27 for the CCI

The CCI also saw a panic sell off and an is experiencing an extended cycle.

Any day could see a reversal.

And the reversal should print a intermediate cycle low, as well.

The weekly cycle stands at week 22 and is deep in the timing band for printing a low.

Once a new daily cycle commences, that should also mark the new intermediate cycle.

Like the Miners we see the CCI back testing the declining yearly cycle trend line.

The 550 level has been a level of support that appears to coincide with the declining trend line.

The CCI will need to reverse off this level to keep the bull alive.

Bonds

Bonds continue to trade in a range.
Following a left translated daily cycle my expectation is for bonds to break to the downside.

This was week 7 for the intermediate bond cycle.

Bonds formed a weekly swing low on week 2 and pierced the declining cycle trend line on week 4.

If the yearly cycle is still in decline, then Bonds should break to the downside soon.

The yearly bond cycle peaked on month 4 and formed a swing high on month 5.
The yearly cycle is in decline.
November marks month 8.
The timing band for a yearly low runs from 9 – 13 months indicating another 1 – 5 months of decline.