Cycle Trading: Weekend Report Preview

The Dollar
The dollar printed its lowest point on Monday, following the day 10 peak.  Monday was day 38, placing the dollar late in its timing band for a daily cycle low.

The dollar formed a swing low on Tuesday. A close above the 10 day MA  will signal that day 38 hosted the daily cycle low.  The dollar is in a daily downtrend.  It will continue in its daily downtrend until it closes above the upper daily cycle band. 

This was week 16 for the intermediate dollar cycle, placing the dollar 2 weeks shy of its timing band for an intermediate cycle low.  However the dollar formed a bullish weekly reversal, which eases the parameters for forming a weekly swing low.  A break above 97.46 forms a weekly swing low.  Then a close above the 10 week MA will signal a new intermediate cycle.

The dollar has printed its lowest point in May, following the month 8 peak.  May is month 12, placing the dollar in its timing band to print a yearly cycle low. Since the dollar has printed a lower monthly low in May, the earliest a monthly swing low can now form will be in June.  If week 16 is confirmed as the intermediate cycle low, that will also likely mark the yearly cycle 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 May, 2017 month 12 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.

15 yr

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, 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 closed at an all time high on Friday.

Stocks broke above the previous daily cycle high on Thursday and delivered bullish follow through on Friday. This confirmst that Friday was day 6 for the new daily cycle.  Stocks continue to close above the upper daily cycle band to indicate that they are in a daily uptrend. They will remain in the daily uptrend unless they close below the lower daily cycle band.

 In real time is was tempting to label week 21 as a mild intermediate cycle low.  But the fact that stocks did not form a failed daily cycle has us labeling this week as week 29.  Bearish divergences are developing on the weekly oscillators. Since it is getting late in this intermediate cycle, we need to be suspicious that the new daily cycle may form as a left translated failed daily cycle.  Stocks are in a weekly uptrend.  They will remain in their weekly uptrend unless they close below the lower weekly cycle band.

May is month 15 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. Since stocks printed a higher high in May, the earliest a monthly swing high can form will be in June.