Cycle Trading

There is plenty to discuss tonight. Tonight I plan to look at gold and stocks and defer the rest until the Weekend Report.

So pk34145 asked a great question today that cuts right to the heart of what’s going on with gold.
He asked,
” Now that the April low in $GOLD has been breached, must we accept that we are in the second daily cycle of a intermediate cycle decline? This new intermediate cycle was never confirmed with a weekly swing low nor with a trend line break. Could this be a very extended intermediate cycle with the yearly cycle low still in the future?”

Gold needed to break above 1495.40 to form a weekly swing low off the April panic low. As we have been chronicling, that never happened.
So since gold has not met our criteria for a new weekly cycle, then it is still caught in the grip of a intermediate cycle decline. With the decline today, gold clearly has confirmed that April did not mark the weekly nor yearly cycle low.

Now we had the April low at 23 weeks. That puts gold currently at 32 weeks. So is this a very extended intermediate cycle with the yearly cycle in the future? Well it is a possibility. The problem with this is that this makes this cycle length an outlier.

Another possible explanation is that due to the severity of the yearly decline I missed a shallow weekly swing low and this week just might be week 17. The trouble I have with this second explanation is the lack of a trend line break. However it does satisfy two of the three criteria for a new intermediate cycle:
1) A weekly swing low
2 ) The swing low occurring during the timing band.

Either way , the yearly cycle low is still out in front of us.

Gold’s yearly cycle averages out to about 11 to 12 months. You will notice during bullish times the yearly cycle can stretch to 16 months.

So it is quite clear that June is month 12 for the yearly cycle. And that puts gold in the timing band to form a monthly swing low. However, gold remains a yearly cycle decline until a monthly swing low forms.

Stocks

The previous daily equity cycle was a right translated cycle that peaked on day 24 and printed a low on day 34. Our cyclical expectation would be for a right translated daily cycle to be followed by a daily cycle that prints a higher high. However, I have been pointing that we need to keep an open mind to another possibility that played out last year.

Equities back in 2012 printed a 24 day right translated daily cycle in April. It was the 4th daily cycle of the intermediate cycle. What followed was the final daily cycle of that weekly cycle. That 5th daily cycle failed to print a higher daily cycle high before rolling over into the intermediate cycle decline.

Deja Vu

The 4th daily cycle of the current intermediate cycle just printed a right translated daily cycle. And today stocks delivered a clear and convincing break of the previous daily cycle low. Doing so confirms that this is a failed daily cycle which signals an intermediate cycle decline. With today being only day 10, stocks still have 5 to 6 weeks to find a daily cycle low.