Equity Swing High

July 24, 2013

Stocks formed a swing high and had a trend line break today, day 21.

Friday, Monday and Tuesday saw some mild Selling on Strength printing 91, 54, 42 respectively. These type of numbers lead me to think stocks are about to deliver either a half cycle low, or perhaps an early daily cycle low. But I would not expect to see an intermediate correction begin based on these numbers.

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The dollar and equities had been correlated over the past few months. But since July 10th stocks and the dollar have once again resumed an inverse correlation. I think that the severity of a correction for stocks will be related to the strength of the dollar’s bounce out of its impending daily cycle low.

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Tuesday was day 24 for the daily dollar cycle. Tuesday is also the lowest point since the dollar cycle peaked on July 9th. Wednesday saw a swing low form. A little follow through to the upside will deliver a clear and convincing trend line break confirming a new daily cycle.

Gold reacted to the dollar’s strength today.

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Gold did managed to print a marginal higher high today. But gold could not break through the resistance at the 1350 level and retreated. At day 17, gold is encroaching on its timing band for its daily cycle low. A break below 1313.10 forms a swing high. Then a trend line break will confirm that the daily gold cycle is in decline.

So if gold does decline into a daily cycle low here, we will be watching for gold to print a higher low. A higher daily cycle low confirms a new intermediate and yearly cycle has been left behind.

So if gold does print a higher low, it will be time to back up the truck …

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10 responses to “Equity Swing High”

rlmsix

July 24, 2013

Likesmoney,
Had this truck ready last fall and thought is was full of gas, We know where that went. Now we need to see IMO Step #4 completed, that should provide the truck’s tank with the gas it needs to get Step #5.
On another note, do you think the $ has a chance of waiting until the next FMOC before the DCL and streching this DC since the last one was short.
Jack Dog

Reply
1. likesmoneystudies
  
  July 24, 2013
  
  Possible.
  Another possibility is that a new daily cycle has begun.
  And the dollar will rally until the FMOC.
  Then that would force Ben’s hand and he will torch the buck.
  
  Reply
Humberto (@CandlewoodAMgmt)

July 24, 2013

Nice job on the update. We have gaps in Gold just above the 13 EMA. I am thinking that is a likely turnaround point short term. However, if we are making higher lows in a daily cycle low could see upper 1200 area for a pullback.

How far down are you now projecting the pullback to go?

Thanks,

Humberto

Reply
1. likesmoneystudies
  
  July 25, 2013
  
  Humberto,
  
  As long as gold holds above the June 28th low, we have a higher low.
  Having said that, I am looking for gold to backtest the resistance that should now become support at the 1290 zone.
  
  Reply
PT

July 24, 2013

Thanks for your great reporting, LM.

Gold never really surpassed the declining weekly trendline dating back to April.

Was April 15 or June 28 gold’s ICL?

Reply
1. likesmoneystudies
  
  July 25, 2013
  
  I like to draw my declining trend lines off the weekly peak.
  But there is clearly an accelerated trend line that was breached to the upside.
  
  And I have June 28th as the ICL.
  
  Gold should not break below the June 28th low.
  
  Reply
BOBCAT

July 25, 2013

Where Do you get these cool pics like of the golden dump truck…lol

Reply
1. likesmoneystudies
  
  July 25, 2013
  
  I’m glad that you like them 🙂
  
  Reply
  1. BOBCAT
    
    July 25, 2013
    
    I do, and i wish i had something more intelligent to add other than “OOoh pretty pictures”….lol…But I do appreciate your insights too!
  2. likesmoneystudies
    
    July 25, 2013
    
    Well I am glad that you are on board!
    
    I am sure you will find things that you can contribute on.