Cycle Trading

First the bad news.

Stocks printed a hard reversal dropping 1.83%
This drop negates the swing low formed by Friday’s print.
The daily equity cycle is now on day 36.
The reversal potentially has set the declining cycle trend line.
Equities have a 9 day window for a normal timing band to print a daily cycle low.

Corresponding to the hard reversal lower in stocks was the hard reversal higher in the dollar.

It looked like the dollar was in the process of forming a swing high early today.
Then the dollar reversed higher, establishing a new daily cycle high on day 16.

And the price action on the dollar today has finally confirmed that September left behind a yearly cycle low.
To Review, September was the lowest point following the July yearly cycle peak.
Since then the dollar had a break of the declining yearly cycle trend line.
And finally today the dollar broke above the September high to form a monthly swing low confirming a new yearly cycle.

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Now, on to the good news

Even though stocks dropped a big 1.83% — there was a big buying on weakness day.

The Buying on Weakness print indicates that the Big Boys see this as a correction and are placing bullish bets.
Still, the BOW is not a precise timing tool and we can still see more down side for stocks.

Gold also delivered some good news today …

We saw how gold formed a swing low off Thursday’s panic sell off.
Today in the face of the fierce dollar rally and big equity sell off, gold provided some nice follow through to the Friday’s swing low.

I would say that the equity B.O.W. and follow through on gold that …