Cycle Trading: The 7/14/17 Weekend Report Preview

The Dollar

The dollar printed its lowest point on day 28. It has formed a swing low but has been contained by the 10 day MA so it is not clear if day 28 hosted a DCL.

A break above the declining trend line is needed to confirm day 28 hosted the DCL. But a break below the day 28 low of 95.22 will extend the daily cycle decline which would make Friday day 36. That aligns with 6 of the previous 8 daily cycles exceeding 30 days. The dollar is in a daily downtrend and will remain so until it can close above the upper daily cycle band.

Week 21 remains as the lowest point following the week 4 peak. Unless the dollar breaks lower, it will need to break above the week 21 high of 97.16 to form a weekly swing low to signal a new intermediate cycle. The dollar is in a weekly downtrend and will continue in its weekly downtrend until it can close above the upper weekly cycle band.

June was month 13, placing the dollar in its timing band to print a yearly cycle low. A monthly swing low is required to form a yearly cycle low. A break above 97.51 would form a monthly swing low.

The dollar printed a failed yearly cycle in May, 2016 to confirm the 3 year cycle decline. Then the dollar went on to printed a higher monthly high. Since a cycle cannot fail and then print a higher high, this confirms that May, 2016 was an early 3 year cycle low. That makes July, 2017 month 14 for the new 3 year cycle. The dollar has now broke convincingly below the 3 year trend line, indicating that start of the 3 year cycle decline. If that is the case then the subsequent yearly cycles should form as left translated yearly cycles until the 3 year cycle low forms. And if the 3 year cycle decline has begun, then it is setting up as a left translated 3 year cycle. That aligns with our 15 year super cycle analysis.

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. There are some similarities developing to the current set up. Currently, the dollar has printed a new high in January, which is month 105 for the 15 year super cycle. Which is about when the previous super cycle rolled over into its 15 year super cycle decline. At the previous super cycle peak the dollar was quite stretched above the 200 month MA as well as the 50 month MA — as it is was in January. There are bearish divergences developing on the momentum indicators that also appeared at the previous 15 year super cycle peak.

May, 2016 hosted the 3 year cycle low, which was a shortened 3 year cycle of only 24 months. Since most times cycle balances themselves out, we could be poised for the next 3 year cycle to be a stretched 3 year cycle just as the dollar is ready to begin its 15 year super cycle decline. And a stretched 3 year dollar cycle decline would align with gold beginning a new multi year bull cycle.

 

Stocks

Stocks formed a daily swing low and closed above the declining trend line on Wednesday. Then provided bullish follow through on Thursday to confirm that day 29 hosted an early DCL.

Stocks continued higher, closing at an all time high on Friday. While the status of the intermediate cycle has us expecting a left translated daily cycle formation, the fact remains that stocks are in a daily uptrend. The will continue it their daily uptrend until they close below the lower daily cycle band.

The lack of a failed daily cycle signals that this is week 36 of an extended intermediate cycle. Stocks are late in their timing band for an intermediate cycle decline. But stocks remain firmly in a weekly uptrend. The will continue in their weekly uptrend until they close below the lower weekly cycle band. At this point we are looking for a close below the upper weekly cycle band to indicate that stocks are beginning their intermediate cycle decline.

Stocks broke out to a new high in July locking in a right translated yearly cycle formation. Stocks are deep in their timing band for seeking out their yearly cycle low. A monthly swing high accompanied by a break of the monthly trend line will confirm the yearly cycle decline. Since July printed a higher monthly high, the earliest a monthly swing high can form will be in August. at this point if an intermediate cycle decline is confirmed, it will likely signal the yearly cycle decline as well.