Cycle Trading

The dollar got a bit stretched above the 10 day MA on Wednesday. It formed a bullish reversal off of the 10 day MA on Thursday and closed higher on Friday. Currently, the dollar is in a daily downtrend. But a close above the upper daily cycle band will end the daily downtrend and begin a new daily uptrend.
 

Stocks

We have been watching this megaphone topping pattern.

Stocks appear to have delivered a classic false breakout. Stocks formed a swing high and closed below upper stem of the megaphone to signal the daily cycle decline. With stocks in their timing band for an intermediate cycle decline – this could trigger the intermediate cycle decline and a revision to the mean.

However if stocks can recover the upper stem of the megaphone and break above the day 56 high – then I would submit that the flood of liquidity would be overwhelming our timing bands and that stocks are entering a bubble phase.

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