Cycle Trading

The dollar closed above 80.50 for the first time since 1/09/13.

Friday was day 10 for the daily dollar cycle.
Following a failed daily cycle, the dollar appears to be in the first daily cycle of a new intermediate cycle.
This cycle is likely to form as right translated.
The swing high formed by Wednesday’s print appears to have set the daily cycle trend line.
A swing high accompanied by a daily cycle trend line break will signal a daily cycle decline.

Stocks

Friday was day 32 for the daily equity cycle.

The dollar printed its daily cycle low on 2/01/13.
It formed a swing low on 2/02.

Stocks dipped on 2/02 but, despite the dollar rally, they continued higher.
I think that at least one of the reasons why stocks have continued higher despite the dollar rally can be explained by what we see in bonds, which we I fully discuss in the Weekend Report.

Stocks have entered the timing band for a daily cycle low.
Currently there is a peak on day 30 with a daily cycle trend line break on day 31.
A break above the day 30 intra-day high of 1524.69 would negate the swing high/trend line break.

The dollar rallying out of an intermediate cycle low combined with equities in the timing band to seek out their daily cycle low is usually a recipe for a correction.

I mentioned two weeks ago that this reminds me of how equities behaved last year.

After the first pull back, equities marched relentlessly higher.
Stocks may be in a final blow-off stage before heading into a yearly cycle low.

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The Weekend Report discusses Dollar, Stocks, Gold, Miners, The CCI Index, & Bonds in terms of daily, weekly and yearly cycles.
Also included in the Weekend Report is the Likesmoney CycleTracker

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