Cycle Trading

The Miners were down again today. They have been down 7 of the past 10 days.
Despite that, it looks as if the Miners are about to have a change of trend.

The Miners last printed a right translated daily cycle low on 9/26/12. Since then they have formed 8 consecutive left translated, failed daily cycles. These cycles were characterized by all peaking on day 10 or earlier, most of them peaked by day 6. What is significant that the current daily cycle peaked on day 18, virtually locking in a right translated nature to this daily cycle.

There is other evidence of a change in trend is surfacing.

First off you will notice that MACD formed a higher low while the Miners were printing their yearly low in late July.

Second, I want to draw your attention to the amount of time that the Miners have closed above the 20 MA. There was three days late December into early January. Then there was really nothing until the Miners closed for 5 days above the 20 MA in late March. May into June saw the Miners close above the 20 MA for 8 straight days. Then, of course, there is the current daily cycle that saw the Miners close above the 20 MA for 13 days.

Now I want to back out to a view of the monthly chart.

Here is the monthly miner chart dating back to 2007. Below it is the monthly True Strength Index. Only four times since 2007 has there been a bullish crossover on the monthly TSI, indicating a monthly change in trend. I have notated these and shown how much the Miners rallied after printing the bullish TSI crossover.

You will notice that the monthly TSI is about to deliver another bullish crossover.

Now, let’s go back and take a closer look at the current daily cycle.

As previously mentioned, this cycle peaked on day 18 and now stands at day 27. Since September only 1 daily cycle stretched past 24 days and that one ran 28 days. So the Miners should print a daily cycle low any day now. Assuming that the right translated nature stays intact, then that sets up an expectation for the next daily cycle to go on to make a higher daily cycle high, confirming a new trend.

Since a lower low was printed today, tomorrow will be the earliest a swing low can form. A break above 238.75 forms a swing low.

A once that swing low forms, that will likely present a golden buying opportunity…