Cycle Trading

Last week gold formed a swing low in the timing band for a low. It looked like a daily cycle low was being left behind.

But we wanted to see a clear and conniving break of the declining trend line in order to confirm a new daily cycle.

As it turns out the swing low was a head fake as gold was rejected by the declining cycle trend line. And today gold broke below the day 20 low extending this daily cycle to day 26.

Gold also broke below the previous daily cycle low making this a failed daily cycle. This failed daily cycle extends the intermediate to this being week 21.

Equities delivered some follow through to the swing high formed yesterday.

Wednesday was day 30 for the daily equity cycle. Stocks have now entered the timing band for a daily cycle low. Stocks managed to breach the daily cycle trend line today to signal a daily cycle decline. The timing band runs from 30 to 45 days.

Bonds are also in a daily cycle decline.

Bonds printed a daily cycle low on 11/11. They formed a swing low and then rallied up to test the underside of the previous trend line. Bonds formed a swing high on Tuesday but today saw bonds selling off and breaking below the previous daily cycle low. So bonds now have a failed daily cycle on day 7. And a failed daily cycle signals an intermediate cycle decline.

The weekly chart shows that bonds have been crawling along the 200 MA here at week 13. With a failed daily cycle at day 7,the way looks to be down. This daily cycle could take 2 – 4 weeks to find a daily cycle low taking bonds out to week 15 – 17.

When we looked at NATGAS yesterday there was a swing high with NATGAS testing the daily cycle trend line. Well NATGAS rebounded off the daily trend line reversing the swing high formed yesterday. Therefore maintaing a bullish posture to this daily cycle.