Cycle Trading

The dollar closed below the lower daily cycle band on Wednesday to confirm the daily cycle decline.

The peak on day 9 favors a left translated daily cycle formation. Closing below the lower daily cycle band indicates a continuation of the intermediate cycle decline.

However, the dollar rallied off of support from the 200 day MA on Thursday. Then formed a daily swing low on Friday. It is not surprising that the dollar did not break below the 200 day MA on its first try. Thursday was only 14 for the daily dollar cycle. Since is too early to expect a daily cycle low, it is more likely that this is a counter trend rally that will set the declining trend line.

Stocks

Stocks printed a new higher on Friday, day 25. That locks in a right translated daily cycle formation.

Stocks are 5 days shy of its timing band for a daily cycle low. There are bearish divergences developing. It is not likely that stocks will break above 200 day MA on its first try. Stocks are in a daily uptrend. They will remain in their uptrend unless they close below the lower daily cycle band.

Something to keep in mind is that President Trump will deliver his State of the Union Address on Tuesday. Below are the last two times he delivered the State of the Union.

The last 2 times he delivered the State of the Union Address stocks declined into their cycle lows. And with stocks being 5 days shy of its timing band for a daily cycle low, there is the possibility history repeating itself.

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