Cycle Trading

Pre-Summary

Several markets enter Wednesday’s FOMC announcement near important cycle and structural decision points. The FOMC announcement may provide the catalyst. But rather than predicting the announcement or the market’s reaction, we can allow price to provide the evidence.

Tuesday’s market action had the feel of a market waiting. Stocks finished weaker, but without decisively resolving the structures we have been following. Gold remains under pressure while searching for its DCL. The Dollar moved modestly higher, while Bitcoin continues to consolidate deep in DCL timing.There are exceptions.

Oil continues to extend its bullish breakout and remains one of the stronger markets in the current cycle landscape. Bonds also continued lower, keeping TLT near the long-term support area discussed in our recent analysis.

That leaves several markets sitting near meaningful decision points as we approach Wednesday’s FOMC announcement. And that is where the cycle framework can be particularly useful. We do not need to predict what the Fed will say. We do not need to predict whether the initial market reaction will be bullish or bearish.

We can identify the structures already in place and then watch how price responds.

For Stocks, Gold and Bitcoin, evidence of developing cycle lows remains important. Bonds remain in DCL timing while testing long-term support. Oil, meanwhile, continues to provide bullish follow-through. The FOMC may create volatility. What happens after that volatility will tell us whether any of these structures have actually changed.

Current Framework

Condition: Several markets remain near unresolved cycle or structural decision points.

Catalyst: Wednesday’s FOMC announcement may provide the volatility needed to test those structures.

Next Trigger: Watch price—not the forecast—to determine which markets provide confirmation or invalidate the structures currently developing.