Not Every Cycle Low Looks the Same

Pre-Summary

Several markets entered their timing bands for daily cycle lows this week. But reaching the timing band does not mean that every market will signal its cycle low in the same way. Gold, Stocks and the Miners provide three different examples of how those signals can develop.

One of the advantages of following multiple markets is that we occasionally get to see different stages of the cycle process developing at the same time.

This week provided a good example.

Gold printed its lowest point on Day 34, placing it in its timing band for a DCL. Gold then formed a swing low but remained contained by the 10-day MA. That makes Day 34 a candidate for the DCL. Confirmation remains outstanding.

Stocks printed their lowest point on Day 24 and formed a swing low. Stocks then closed above the 10-day MA on Thursday.That provided the evidence needed to label Day 24 as the DCL.

Then there are the Miners.The Miners printed their lowest point on Day 32 before forming a swing low and closing above the 10-day MA on Thursday. That provided the evidence needed to label Day 32 as the DCL. But Friday delivered a different message.

The Miners formed a swing high and closed back below the 10-day MA, immediately challenging the bullish follow-through we would normally want to see following a DCL.

That does not mean we ignore Thursday’s signal. It means we continue evaluating the evidence. This illustrates an important distinction in cycle analysis.

Timing tells us where to look for the low.
Price tells us when the low can be labeled.
Follow-through tells us whether the market is supporting that interpretation.

Not every cycle low will develop the same way.

The cycle framework identifies where to look. The market still has to provide the evidence.

Current Framework

Candidate: A market reaches its timing band and begins developing the structure of a potential cycle low.

Signal: A swing low followed by a close above the 10-day MA provides the evidence needed to label the DCL.

Follow-Through: Subsequent price action either strengthens or challenges that interpretation.

Cycle Trading