Cycle Trading

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Precious metals continue to develop their bullish framework.

The precious metals complex all printed higher highs today. Silver was particularly impressive with over a 4% gain today.

Gold continued developing its bullish frame work by breaking through the declining trend line and coming within 4 points of printing a higher high.

The Miners also broke above their declining trend line to confirm the new daily cycle. We now expect both gold and the Miners to print higher cycle highs.

Both the Junior gold and silver Miners broke out today printing a higher high over the previous daily cycle high.

As noted in the above charts, all of the Miners gapped up today. It would not be unusual for the Miners to fill these gaps before rallying higher.

All of this happened while the dollar rallied today. There is a change in character in the precious metals complex. During the yearly cycle decline, any dollar strength was met with precious metals weakness. Now we are seeing precious metals are able to rally in the face of the dollar’s strength today. Perhaps precious metals are sniffing out more dollar downside.

Monday was day 8 for the daily dollar cycle. The dollar did form a swing low off of Thursday’s candle and backtested the 200 MA. As we know, nothing goes straight up or down. As long as the dollar is contained by the declining intermediate cycle trend line, then I view this as the dollar setting its declining daily cycle trend line.

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The daily equity cycle peaked on day 28 and Monday was the lowest point since the day 28 peak. A break above 1691.49 forms a swing low. A break above the declining cycle trend line signals a new daily cycle. Having said that we need to keep in mind that stocks usually breach the lower Bollinger Band when printing their daily cycle low.

Back to the Miners. The Miners tend to have a double correlation to the dollar and stocks. The Miners demonstrated terrific relative strength today considering the dollar strength and weakness in stocks. Once stocks begin their new daily cycle combined with the dollar declining into its daily cycle low provide an additional spark to this precious metal rally.

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