Cycle Trading

Monday was day 8 for the daily dollar cycle.

Following the two day surge and reversal on Friday, the dollar consolidated that move. The dollar is at an interesting point. While the dollar printed an intermediate cycle low on May 1st, Friday’s reversal hints at a possible daily cycle top. Keep in mind that most left translated daily dollar cycles peak on or before day 8.

Should the dollar break above Friday’s high of 83.43 that would be day 9 and increases the likelihood for this cycle to form as a right translated daily cycle. However, if Friday’s high holds and the dollar breaks below Friday’s low of 82.68 then a left translated daily cycle is still a possibility.

While we are waiting on the dollar let’s look at some other areas …

Starting with the soft commodities

You will notice that 4 of the 6 soft’s posted gains. And three of the 6 posted gains of 1.61 % or better.

Hmmm…

On to the grains

All 7 grains also posted gains, hmmm …

Makes me wonder if these two commodity areas are sniffing out a dollar top.

So let’s look at the metals.

While only Palladium posted a gain, all of the metals did not print a lower low.
But take another look at Palladium. A whopping 1.73% gain and a bullish divergence from gold.
Palladium may be the early leader here …

Bonds

Monday was day 24 for the daily bond cycle. Bonds had a arrow range day in the latter part of the timing band for a daily cycle low. A break above 118.19 forms a swing low and possibility a daily cycle low. A break above the declining cycle trend line would confirm a new daily cycle.

Since this current daily cycle is a failed daily cycle, it likely means that bonds have entered an intermediate cycle decline. That sets up an expectation for the next daily cycle to form as a left translated daily cycle, peaking on or before day 8.

Now if bonds are about to form a daily cycle low, that may help to explain the 134 Selling On Strength that the SPY printed today. Stocks are on day 17 of their daily cycle. And perhaps with bonds initiating a new daily cycle that will pressure stocks into a half cycle low. And with the expectation for bonds roll over again shortly (before day 8) then stocks continue marching higher.