Cycle Trading

Tonight I want to step back and look at the big picture — beginning with stocks

This is week 19 for the intermediate cycle. Another 2 to 5 weeks will place stocks in their timing band for an intermediate cycle low. Bearish divergences continue to develop on the weekly chart.  A break below 4504.90 will form a weekly swing high. Then a break below the weekly cycle trend line will signal the intermediate cycle decline.

The dollar printed its lowest point last week. That was week 14, which is early to expect the ICL to form. However, we will need to be open to the idea that the dollar is behaving as if this was week 24 — which would place it in its timing band for an ICL. The dollar formed weekly swing low. A close above the 10 week MA will signal the new intermediate cycle.

So the dollar is potentially rallying out of an intermediate cycle low. That along with reaction to the Fed rate decision on Wednesday and Q2 earnings this week could send stocks into an intermediate cycle decline.