Cycle Trading

Thursday was day 31 for the daily dollar cycle and the dollar continued lower tagging the 80.50 support level before reversing.

A break above 80.87 forms a swing log. Since the dollar is so late in the daily cycle, a swing low now would likely mark the daily cycle low.

This is week 6 for the intermediate dollar cycle. The intermediate cycle can run 18 – 20 weeks or even longer. Since the intermediate cycle has already failed, all daily cycles going forward should form as left translated failed cycles until an intermediate cycle bottom prints. Therefore our expectation is once the new daily cycle begins, will likely peak by day 8 before rolling over.

With the dollar reversing off the 80.50 support level, stocks also reversed higher today.

Stocks formed a daily cycle low last Thursday, then broke above the declining cycle trend line on Friday confirming a new daily cycle . After a brief bump higher on Monday, stocks sold off until today were they reversed higher. Thursday was day 5 for the daily equity cycle.

If the dollar rallies as expected, I expect to see stocks follow suit. Stocks should eclipse the Monday high and then make a run towards 1700. With this being the 5th daily cycle to the current intermediate cycle, we are expecting this cycle to form as a left translated daily cycle. We will need to pay attention to the Selling on Strength numbers as a clue for when the top is near.

Just like we expect the dollar to rollover soon, that extends to stocks as well.

Bonds may have printed a daily cycle low on Tuesday.

A swing low did form today. Bonds have been dropping since May 1 st . I believe that a stealth daily cycle low printed on May 15th. That would make Tuesday day 18, which is in the timing band for a daily cycle low. Bonds need to break above the declining trend line to confirm a new daily cycle.

So bonds may have printed a daily swing low, it does not change the big picture. Bonds are on week 14 for a failed intermediate bond cycle. Since this week printed a lower low, the earliest that bonds can print a weekly swing low is next week. If I am right and Tuesday was a daily cycle low, then there is a possibility for bonds to begin a new intermediate cycle.

We would need to see a weekly swing low and an a break of the declining weekly trend line to confirm a new weekly cycle.

Since bonds already broke below the previous yearly cycle low, our expectation is for a new intermediate cycle to peak quickly then form as a left translated, failed cycle.

So both the dollar and bonds can see a brief rise before more follow through to the downside.

Despite the bullish reversal on the dollar, the Miners showed some life.

Thursday was day 17 for the daily Miner Cycle. The Miners seem to have found support at the 260 level. Since today printed a lower low, the earliest a swing low can form will be tomorrow. A break above 265.77 forms a swing low and possible a new daily cycle.

So if the Miners can print a higher low, that would be the first step in confirm a new yearly cycle.

And that could be the spark that we are waiting for …

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