Cycle Trading

The dollar continues to coil and appears to be in the process of forming its DCL.

The dollar printed its lowest point on Wednesday, day 42, placing it deep in it timing band for a DCL. A break above 102.56 will form a swing low. Then a close above the 10 day MA would have us label day 42 as the DCL. The dollar is currently in a daily downtrend. The dollar will remain in its daily downtrend unless it close back above the upper daily cycle band.

Stocks

Stocks delivered a bullish surprise on Friday.

Stocks closed below the 200 day MA on Wednesday then below both the 50 day MA and the 10 day MA on Thursday. Losing these 3 important moving averages over 2 days is bearish and gives us the expectation that stocks have begun their daily cycle decline. Instead of delivering bearish follow through on Friday stocks formed a swing low and closed above the 3 aforementioned moving averages. Stocks are currently in a daily uptrend. Forming a swing low above the lower daily cycle band indicates a continuation of the daily uptrend and signals a cycle band buy signal.

Stocks have consistently been rejected by the 200 day MA since April. Stocks closed above the 200 Friday. If stocks deliver any bullish follow through that will be a very bullish change in behavior.  

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