Just the Facts …

January 3, 2013

There was a shortened daily cycle nearing the end of an intermediate cycle which lead to a bullish break out.

Thursday was day 9 for the dollar’s daily cycle.
At 9 days, the odds shift towards the dollar printing a right translated daily cycle
A right translated daily cycle following a failed daily cycle signals a new intermediate cycle.

The rally today by the dollar broke through the weekly declining trend line confirming a new intermediate cycle.
This is week 2 of the new intermediate cycle.

Now the previous weekly cycle was a 14 week cycle that peaked on week 9.
That was a right translated weekly cycle setting up the expectation for this weekly cycle to print a higher weekly high.

Now lets see how this is playing out on the yearly cycle.

Something that we discussed off and on was whether or not September hosted an intermediate cycle low.
Today’s action shifts the odds over towards a yearly low having been printed.

One of our clues has been the monthly coil that we have seen forming since September.

Monthly coils tend to occur at yearly cycle lows.
Not all yearly cycle lows have them, but most coils occur at yearly cycle lows.

Precious metals took it on the chin in the face of the fierce dollar rally.

We have a possible new yearly cycle rally in the dollar coupled with an ugly swing high on gold (and the Miners)
Until the daily cycle fails by taking out the previous daily cycle low, it hasn’t.

Prudence would suggest parrying down risk in precious metals until precious metals deliver a favorable set up.

That is not the case with equities.

Despite the dollar rally, equities barely yawned.
After two big days some profit taking would be expected but equities barely pulled back.

And the Buying on Weakness print suggests that the big Boys are still placing their bets on equities

Considering the hammering precious metals took,
the relative strength displayed by equities
and the bullish buying on strength print on the SPY,

it looks like equities will be the place to rake in some profits …

13 responses to “Just the Facts …”

trondtveten

January 3, 2013

Joe, tnx for the interesting Usd seasonal chart. -Now at 9pm, the silver DC have already failed.. Yesterdays guess that the $ might continue to rally due to higher interest rates in the US in conjunction with the spike in yields, have played out. This of course don’t always happen, for instance in a loss of confidence situation with hyper-inflation and/or looming debt default, even high interests will not attract. (Might soon be the case in the US, maybe as soon as the debt ceiling debacle starts..).

Reply
trading101

January 3, 2013

Yes but what about all this QE3 and QE4 and the death of the dollar and hyperinflation. How the dollar possibly be rallying. This can’t be correct. Must be manipulation.

Reply
trondtveten

January 3, 2013

The rally in Sp500 can be explained by the recent important simultaneous trend-line breakout of both the Shanghai stock market (up from a multi-year falling wedge):
http://stockcharts.com/h-sc/ui?s=$SSEC&p=W&b=5&g=0&id=p60368764921
as well as the Japanese equities:
http://stockcharts.com/h-sc/ui?s=$NIKK&p=W&b=5&g=0&id=p33638995189
-The second and 3rd largest economies in the world.
At the same time the India stock-market (1+ billion people) continues its uptrend which started last summer.
http://stockcharts.com/h-sc/ui?s=$BSE&p=W&b=5&g=0&id=p67374260185

This should ultimately benefit the commodities too (and hopefully gold).

Reply
Joe

January 3, 2013

Thanks LM and Trond. If the US$ is long-term bullish that changes a lot. Just as important is that the correlations to stocks and bonds seem to have reversed as well. Stock and the US$ seem t rally together and bonds sell off at the same time. This is the Pres. Clinton scenario (especially his second term 1996-2000) – maybe this is a Democrat presidential phenomenon (we already know that stocks fare much better under Democrat presidents, bonds fare worse and maybe the US$ is stronger as well). This would also mean a much stronger US economy – and we all know that we really need this! For us Americans this is the ideal scenario – our home loans are usually fixed rate and with a strong US$ and weak commodities that gives us better purchasing power. No more need to hedge anything – life would be great! Hopefully, it will play out.

Reply
FLR

January 4, 2013

An advantage of being in Asia…. Just saw gold hit 1634.70 (Feb 13 futures) and now ca. 1636ish. So it turns out that Dec 20something was not the low and the unusually short (or long) cycle was a fakeout. Hopefully something around 1634 is the ICL. But, again, it’s hard to catch this in real time and human nature will start justifying long or short cycles. I noted that Smart Money Tracker predicted this scenario if you look at his Dec 21 public posting. His prediction did not appear likely until this surprising drop. Let’s hope that he is right about it picking up from here. Maybe a good time for people to get in.

Reply
1. likesmoneystudies
  
  January 4, 2013
  
  FLR,
  
  Thanks for posting this.
  I think that Gary at SMT had it right.
  
  This looks like an IC low.
  
  Reply
  1. bandy1981
    
    January 5, 2013
    
    LM
    Does this also signal a yearly low?
  2. likesmoneystudies
    
    January 6, 2013
    
    bandy1981,
    
    I covered this in the weekend report
bandy1981

January 4, 2013

http://smartmoneytracker.blogspot.nl/

Reply
bandy1981

January 4, 2013

http://smartmoneytracker.blogspot.co.uk/

Reply
vorfahrt

January 4, 2013

LM: Does this create any different expectations in your market roadmap in the subscriber area? – I think it might… Thanks, Joe

Reply
1. likesmoneystudies
  
  January 6, 2013
  
  Vorfahrt,
  
  It does look like I will need to revise the forecast
  
  Reply
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