Cycle Trading

In the weekly equity chart below the red arrows mark the intermediate cycle lows.

Once an intermediate equity cycle low is printed, stocks tend to rally at least 4 – 6 weeks before taking a breather.

I boxed out the equity yearly cycle lows. These yearly lows tend to be nasty affairs where the intermediate rally tends to test the bottom after 4 – 6 weeks.

Zeroing in to the daily chart it seems that after a big 4.89% push we see that stocks are now back testing the previous declining daily cycle trend line.

The general trend for stocks for the next 4 – 6 weeks should be up and any pullback presents a buying opportunity.

Notice the Buying on Weakness Number printed today

The SPY had a big 301 million printed for Buying on Weakness.

Add that to the 1032 million that printed prior to the intermediate cycle low as shown below

So the Big Boys are still placing their bullish bets.

So what about the dollar?

After such a big down day on Friday, the dollar needed a breather.
I would not rule out one more push lower, but with Monday being day 28, the dollar’s daily cycle is beginning to get stretched.
A narrow range lower low would ease the parameters for the dollar to form a swing low.
The next swing low for the dollar will likely mark the daily cycle low.
For reasons discussed in the Weekend Report coupled with the fact that equities are in the early stages of a new intermediate cycle, the chances are that the new daily dollar cycle will be left translated.

A left translated daily dollar cycle will likely fuel the intermediate cycle rally.

The pieces seem to be falling into place that could have stocks rallying into the new year.