Cycle Trading

The Fed will maintain their 85 billion monthly bond buying acknowledging the potential dangers of inflation running too low.

The dollar reacted by printing a bearish reversal.

So was today an extended daily cycle low or is Monday the daily cycle low and Wednesday day 2?

While it is prudent to be open to the possibility of an extended low, I think that we just witnessed a day 2 peak on a new daily cycle.

Since this was the last trading day of the month, let’s see how the dollar’s monthly chart looks.

The dollar printed a yearly cycle low in June. That makes July month 1 of a new yearly cycle. July also happens to be month 26 of the dollar’s three year cycle. (The dollar has been printing a three year low on average every 35 months for over the past 30 years.) With a three year cycle “due” in 9 months, it is very likely that this new yearly cycle will be the final yearly cycle leading into the three year cycle low.

Three year cycle lows for the dollar tend to be rather nasty affairs. The dollar dropped over 8 points heading into its previous three year low. With QE’s I, II , III, and Infinity I believe that the dollar is in worse shape now then three years ago. We may have just witnessed a yearly cycle peak at month one. If that is the case, this will be an extremely left translated yearly cycle leading into a severe three year cycle low.

Commodities seem to think that the dollar’s daily cycle topped today.

The CRB’s daily cycle peaked a week ago Monday and has been in decline since. Today saw the CRB print a lower low then print a bullish reversal. The CRB is in its timing band for a daily cycle low. A swing low will likely mark the daily cycle low. The bullish reversal has eased the parameters for forming a swing low. A break above 283.96 forms a swing low.

Now let’s take a look at the Miners.

The Miners have been printing a series of lower lows since last fall. Today saw the Miners print a doji suggesting a change is at hand.

The Miners daily cycle peaked a week ago Tuesday. The cycle has been in decline since. The Miners broke below the daily cycle trend line yesterday signaling the daily cycle decline. Should the Miners form a swing low here this will be the first higher low since last September. The higher low confirms that the yealy cycle low is behind us and a Miner Opportunity is in front of us.

All courtesy of Ben’s 85 Billion per month party …