Cycle Trading

After printing an intermediate low in early May, the dollar rallied and managed to close above the 200 day MA briefly.

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Friday saw the dollar form a swing high and close back below the 200 day MA. This was also accompanied by a bearish crossover on the True Strength Indicator. All of this signals a daily cycle decline. A peak on day 13 has shifted the odds of this daily cycle forming in a right translated manner. The printing of a higher daily cycle low would provide final confirmation of a right translated cycle. It would also set up the expectation to see the subsequent daily cycle go on to print a higher daily cycle high.

Stocks

After see-sawing back and forth over a thirty point range for the past 6 weeks stocks finally broke out higher this week.

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Friday was day 33 for the daily equity cycle. While stocks set a new daily cycle high on Friday, stocks are also in the timing band for a daily cycle low. A swing high forming now will likely signal the daily cycle decline. A break below Friday’s low of 1916.64 forms a swing high.

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