Cycle Trading

The Dollar

The dollar continued to close above the 50 day MA this past week.

The dollar formed a swing low the previous Wed & then closed 6 consecutive times above the 50 day MA, turning the 10 day MA higher, to confirm that day 26 hosted the DCL. The dollar is still in a daily downtrend. A close above the upper daily cycle band will end the daily downtrend and begin a new daily uptrend.

Stocks

Stocks printed their lowest point on Monday day 34, following the day 21 peak. That places stocks in their timing band for a daily cycle low. Thursday’s close above the declining trend line confirms a new daily cycle.

Stocks closed lower on Friday, dropping over 2% to retest the 200 day MA. At this point while we could still get more volatility, I do not expect stocks to break below the day 34 low therefore we will label day 34 as the DCL. Stocks are in a daily downtrend. They will remain in its downtrend unless they close above the upper daily cycle band.

I suspect that the rally out of the day 34 low will gain traction once oil prints its impending daily cycle low. (I cover oil’s daily, weekly, and yearly cycles in the Weekend Report)

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