The Dollar
The dollar broke below the daily cycle trend line and below the 50 day MA to print its lowest point on day 24, placing it in its timing band for a DCL.
The dollar formed a swing low on Tuesday and then delivered bullish follow through by closing above the 10 day MA on Wednesday to signal the new daily cycle. Something that we will be watching is the convergence of the 10 day MA with the 50 day MA. A break below this convergence would send the dollar into an intermediate cycle decline. The dollar has begun a daily downtrend. The dollar will remain in its daily downtrend unless it closes back above the upper daily cycle band.
Stocks
Stocks peaked on day 26. They formed a swing high then closed below the 10 day MA on Friday to signal the daily cycle decline.
While stocks did break below the 10 day MA to print its lowest point on day 29, it did not turn the day 10 MA lower in order to form its daily cycle low. That would make Friday — day 33, which places stocks in their timing band for a daily cycle low. With stocks in their timing band for a DCL, it is not likely to see a sustained breakout above the 200 day MA. But the Fed is flooding the market with an unprecedented amount of liquidity. A convincing close above the 200 day MA would have us label day 29 as a very mild 29 day DCL. Stocks are currently in a daily uptrend. They will remain in their daily uptrend as long as they do not close below the lower daily cycle band.
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