Cycle Trading

Thursday was day 31 for the daily dollar cycle. Friday saw the dollar barely form a swing low. Today the dollar delivered a trend line break marking today day 3 for a new daily cycle.

If Thursday was the daily cycle low, the bounce out of that low has been weak. I believe its is because May 1st marked not only a daily cycle low, but an intermediate cycle low. So the dollar printed not only a failed daily cycle, but a failed intermediate cycle as well. All daily cycles should now form as left translated, failed cycles until the yearly cycle low prints later this year. Therefore we can expect to see this cycle top on or before day 8.

Today was day 8 for the daily equity cycle. Stocks broke above the 1650 support/resistance level today. I believe that today signals that stocks will look to make new highs before rolling over into an intermediate cycle decline.

I believe that since this is the 5 th daily cycle that this cycle should form as a left translated cycle peaking by day 20. It is worth noting that stocks printed 21 million in Selling on Strength. The S.O.S. is something that we are going to monitor. I suspect that we will see some large S.O.S. prints prior to the top being printed.

Gold made a break lower today, maintaining its current inverse correlation with stocks.

Tuesday was day 20 for the daily gold cycle. Gold is in the timing band for a daily cycle low. Gold is approaching the lower stem to the triangle and also tagged the lower Bollinger Band today. Should gold break below the lower stem, then gold would be at risk for a failed daily cycle signaling an intermediate cycle decline. A reversal off the lower stem will form another higher low and keep alive the triangle consolidation scenario.

We discussed last night how Palladium has been leading gold, well palladium printed a reversal today.

Palladium also had a Bollinger Band crash today. A swing low accompanied with a declining trend line break would signal a new daily cycle.

And may also signal an impending reversal for gold as well…