Cycle Trading: Weekend Report Preview

The Dollar

The dollar is getting late in its timing band to form a daily cycle low.

The dollar printed its lowest point on Friday, following the day 19 peak. The dollar's daily cycle has averaged 31 days since printing its yearly cycle low in May. Friday was day 30, placing the dollar in its timing band to a daily cycle low. A swing low and a break above 100.28 will form a daily swing low. Then a close above the declining trend line will confirm the new daily cycle. Since the declining trend line is over 1.6% away we will use a close above the declining 50 day MA as confirmation of a new daily cycle.

The peak on day 19 indicates a right translated daily cycle formation and the the February DCL also hosted an intermediate cycle low. But by closing below the lower daily cycle band, that ends the daily uptrend and is a signal that the next daily cycle may form as a left translated cycle.

The dollar is in its timing band to decline into a yearly cycle low. A left translated failed weekly cycle is needed for the yearly cycle decline. The dollar has formed a weekly swing high off the week 6 peak, potentially setting up a left translated weekly cycle formation. A break below 99.19 will form a failed weekly cycle and confirm that the yearly cycle is in decline. The dollar is currently in a weekly uptrend & will remain so until it closes below the lower weekly cycle band.

March is month 10 for the yearly dollar cycle. That places the dollar in its timing band to seek out a yearly cycle low. The new intermediate cycle is potentially setting up the declining monthly trend line. The dollar will now need to break below the February low of 99.19 in order to complete its yearly cycle decline.

The dollar printed a failed yearly cycle in May to confirm the 3 year cycle decline for the dollar. The dollar has since printed new monthly highs. Since a cycle cannot fail and then print a higher high, this confirms that May was an early 3 year cycle low. That makes March month 10 for the new 3 year cycle.

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 right now. There are bearish divergences developing on the momentum indicators that also appeared at the previous 15 year super cycle peak.

May 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

The daily equity cycle peaked on day 40, formed a swing high then broke below the (red-dashed) accelerated trend line to signal the daily cycle decline.

Stocks printed their lowest point on day 46. That was not enough to break below the (black) daily cycle trend line. But 46 days places stocks in the later stage of its timing band for a daily cycle low. There were other indicators that day 46 hosted the DCL including the TSI bearish zero line crossover prior to day 46 and the bullish TSI zero line crossover following day 46. Stocks also closed convincingly above the 10 day MA on Wednesday providing more confirmation that Day 46 hosted the DCL.

Stocks are in a daily uptrend and will continue in its uptrend until it closes below the lower daily cycle band.

Stocks continue to close above the upper weekly cycle band remaining in its weekly uptrend. This was week 19 for the intermediate stock cycle. The week 17 high indicates a right translated weekly cycle formation. With the new daily cycle just beginning, that should take the intermediate cycle out to late April or into May. Stocks have formed a weekly trend line. A swing high accompanied by a break below the weekly trend line will signal that the intermediate cycle is in decline. Stocks will continue its weekly uptrend until it closes below the lower weekly cycle band.

March is month 13 for the yearly equity cycle. The new high locks in a right translated yearly cycle formation. Stocks are now 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. Once stocks begin their intermediate cycle decline that should also trigger the yearly cycle decline.