The 8/23/13 Weekend Report Preview

Friday was either day 17 or day 3 for the daily dollar cycle. The dollar has already printed two failed daily cycles and may already be on day 3 of a new (and likely failed) daily cycle. Our expectation is to continue to see failed daily cycles until the dollar prints an intermediate cycle low.

The dollar first lost the 200 MA as it formed its yearly cycle low in June. It quickly regained the 200 MA as it rallied out of the yearly low and peaking in early July. Following the July peak the dollar printed the ugly bearish reversal and has been declining since. It tested the 200 MA in late July (day 14) and then broke below it in early August. The dollar tried to regain the 200 only to see it get reversed. This week the dollar tried once again to regain the 200 MA only only to be rejected by it. While the daily count may not be clear, the trend certainly is and it is down. The dollar quite likely has begun its decline in into its three year cycle low. And since it lost the 200 MA it may not see it again until the dollar rallies out of the forth coming three year low.

Stocks

Wednesday was day 41 of the daily equity cycle and it looks like stocks printed its daily cycle low.

We see that Thursday formed a swing low and Friday provided more follow through with stocks regaining the 50 MA. While stocks have not confirmed a new daily cycle by breaking above the declining cycle trend line, the bullish TSI crossover does add to our confidence that a daily cycle low has been left behind.

Another signal that the daily cycle low printed is the McClellan Oscillator broke above the declining trend line. So with stocks following a right translated daily cycle our expectation is for stocks to print a higher daily cycle high in this new daily cycle. However, the intermediate cycle is suggesting that any new highs may be short lived …

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2 responses to “The 8/23/13 Weekend Report Preview”

Joe

August 24, 2013

Thanks for your always very helpful reports, LM. Would the decline into the 4-year cycle low not be overdue at this point? Of course, this is a right-translated 4 year cycle but nonetheless some sort of 2+ months decline would be due at some point?

1. likesmoneystudies
  
  August 25, 2013
  
  Joe,
  
  You are correct, we are overdue for a four year cycle low. I do not think it is surprising that since QE stretched the the intermediate cycles and the yearly cycles that the four year cycle also got stretched. I believe that we will see this third intermediate cycle form as a left translated cycle and decline into the yearly and 4 year cycle low.

Cycle Trading