Weekend Report Preview

The Dollar

After rallying on Monday, the dollar declined into Friday.

The dollar lost the 10 day MA on Thursday and delivered more bearish follow through on Friday indicating that the dollar has begun its daily cycle decline.  The peak on day 5 indicates a left translated daily cycle formation. With Friday being day 11, the dollar could trend lower for the next 3 to 4 weeks before printing its DCL.  The dollar currently is in a daily uptrend.  It will remain in its uptrend unless it closes below the lower daily cycle band.

The dollar appearing to begin its daily cycle decline has caused it to break the weekly trend line.  The peak on week 8 sets up a possible left translated weekly cycle formation. A close below the 10 week MA will confirm the intermediate cycle decline.  The dollar is in a weekly uptrend.  It will remain in its weekly uptrend until it closes below the lower weekly cycle band.

The dollar closed above the upper monthly cycle band in October and then closed higher for November.  The new high in November, month 9, shifts the odds towards a right translated yearly cycle formation.  At 9 months, that places the dollar in its timing band for a yearly cycle low. The possible left translated weekly cycle formation would align with the dollar declining into its yearly cycle low.  The dollar will need to form a monthly swing high to begin its yearly cycle decline.  A break below 95.48 forms a monthly swing high.

Closing above the upper monthly cycle band in October confirms that February hosted the 3 year cycle low.  The 15 year super cycle decline has begun.  As long as the dollar does not form a higher yearly cycle high then it will remain in its 15 year super cycle decline. 

The dollar cycles through a 15 year super cycle. Each 15 year super cycle is embedded with five 3 year cycles. The dollar’s last 15 year super cycle peaked in 2001 on month 106, then declined into its third 3 year cycle low. The topping pattern in 2001 is similar to the current set up.   The confirmation of a failed 3 year cycle back in August, 2017 confirms that the dollar has begun its 15 year super cycle decline (bear market).  Therefore we are looking for the dollar to be rejected by the declining multi year trend line to continue its decline into the 15 year super cycle low.

 

Stocks

I believe that stocks printed an intermediate cycle low on 10/29/18. However, both the Russell and the Banking index have broken below their October lows to form failed daily cycles.

The continued volatility has obscured our daily cycle count.  I believe that Friday should be day 27, placing stocks 3 days shy of its timing band for a DCL.  What is clear is that stocks are in a daily downtrend.  They will remain in their daily downtrend until they close back above the upper daily cycle band.

Stocks did break above the declining weekly trend line indicating that week 38 hosted the ICL. I would have liked to have seen a close above the 50 week MA as confirmation of the new intermediate cycle. But instead stocks closed back below the declining trend line.  Which makes me think if stocks follow the Russell and the Banking index lower that will extend the intermediate cycle decline.

Stocks peaked in September, month 7.  They formed a swing high in October, month 8, placing stocks the early part of its timing band for a yearly cycle low.  The huge bearish monthly swing high clearly signals the yearly cycle decline. The 10 month MA has also begun to turn lower, which is another indicator of the yearly cycle decline.

Stocks would need to break above the October high in order to form a monthly swing low to signal a new yearly cycle. However the bullish monthly reversal that formed in November was negated with stocks breaking below the November low.  A break below the October low of 2603.54 will extend the yearly cycle decline.  Despite the recent volatility, stocks remain firmly in a yearly uptrend.  If the monthly swing low forms above the lower monthly cycle band, then stocks will continue in their monthly uptrend.