Cycle Trading

Bonds have reached an inflection point.

Bond’s weekly cycle tends to run about 18 – 22 weeks from trough to trough. The previous weekly cycle ran long at 25 weeks. Many times cycles will balance out a longer cycle with a shorter cycle. You will notice that Monday began week 16 of the intermediate bond cycle. So bonds could very well print a shortened weekly cycle coinciding with the 110 level that marked a turning point for bonds over the past 3 years.

Drilling down to the daily level we see that bonds currently sit at day 27 for the daily bond cycle. Bonds are getting late in the timing band to print a daily cycle low. Also bonds have printed a reversal after breaching the lower Bollinger Band for the past three sessions

So both on a daily and weekly level bonds appear to be ready to print a low.

The dollar amy also be ready for a turn.

The dollar printed an intermediate cycle low on May 1st. The dollar went on to print a higher high confirming a new intermediate cycle. But that cycle failed on day 26 signaling that this new intermediate cycle has entered its primary decline. That sets up the expectation for all subsequent daily cycles to print as failed, left translated daily cycles.

Monday was day 3 of a new daily dollar cycle. Monday saw the dollar being rejected at a significant resistance level, printing a reversal candle. A swing high printing here could send the dollar lower for the next 4 weeks.

Stocks also seem ready for a turn.

Monday was day 46 for the daily equity cycle. Monday was the third straight day that the SPY printed a Buying on Weakness number. This totals over 750 million over the past 3 days.

In real time day 34 did look like the daily cycle low. Stocks failed to break to a new high, but instead, sliced through the intermediate cycle trend line. Stocks also printed a reversal on Monday. Should a swing low form here it has the possibility of marking not only a daily cycle low, but potentially an intermediate cycle low.

It seems that this week could set course for the coming weeks …