Cycle Trading

The Dollar
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The dollar continued higher this week, breaching the 100 level as it printed a higher high on Friday.

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Friday was day 12 for the dollar’s daily cycle. A new high on day 12, or after, swings the odds over to this daily cycle forming as a right translated daily cycle, which is in agreement with what we see developing on the weekly cycle, which is covered in The Weekend Report.

Stocks
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The daily equity cycle peaked on day 16. A swing high and trend line break occurred on day 17 indicating a daily cycle decline.

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Stocks printed their lowest point on Wednesday, day 26. A swing low formed on Thursday that regained the 50 day MA, indicating a new daily cycle. While stocks closed lower on Friday, they left behind a bullish tail indicating an early daily cycle low has been left behind. A break above the declining trend line will confirm the new daily cycle. But a break below the (dashed) intermediate trend line signals an intermediate cycle decline.

While the normal timing band for a daily cycle low stretches from day 30 to day 45, stocks have been known to print early daily cycle lows. Below is a chart from the Likesmoney archives chronicling the 2011-2012 yearly cycle that has two examples of early daily cycle lows.

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Notice that a 25 day DCL printed in March and then a 24 day DCL printed in April.

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