Cycle Trading

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The daily equity cycle peaked on day 39. It declined until last Thursday, day 41. And now has printed three straight gains.

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The decline into the day 41 low did not break below the daily cycle trend line, which is something that we look for to confirm a daily cycle decline. Therefore I suspect that stocks are forming a mini bear flag before resuming their daily cycle decline.

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Stocks printed 206 million for Selling on Strength numbers on Tuesday. While not a precise timing tool, the 206 million Selling on Strength does agree with our cyclical framework that a daily equity low is still out in front of us.

Meanwhile gold continues to be volatile.

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Gold printed a bearish reversal on Monday. Today gold printed a bullish reversal. Nearly 30 points separate Monday’s highs from Tuesday’s lows. Closing near the high of the day eases the parameters for gold to form a swing low. Since this is too early in the daily cycle to print a daily cycle low, gold may be in the process of forming a half cycle low and setting the daily cycle trend line. A break above today’s high of 1273.50 forms a swing low and signals that a half cycle low has been left behind. One possibility is that gold could stall out in this range for the next several days.

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But gold did print a strong Buying on Weakness number today. If gold is in a new intermediate cycle, then this daily cycle should form in a right translated manner. The Buying on Weakness numbers seem to suggest with that there is still some upside to this daily cycle.

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The intermediate bond cycle peaked on week 21. It declined to its lowest point last week and has started off this week in a weak manner. The breach of the weekly trend line signals an intermediate cycle decline.

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The new daily bond cycle has rallied weakly out of the day 20 low that printed last Tuesday. Now a daily swing high has formed off the day 4 peak. A break below 110.85 forms a failed daily cycle, confirming the intermediate cycle decline.
112.63