The weekend report preview

The Dollar:

The dollar formed a swing low on Friday.

Thursday was day 13 for the daily dollar cycle. That is 5 days shy of the dollar's timing band to print a daily cycle low. So there is still time for another push lower before forming a daily cycle low. The dollar is in a daily down trend. It will remain in a down trend until it can close above the upper daily cycle band.

The lower low this week has eased the parameters for forming a weekly swing low. With the dollar deep in its timing band, a swing low will likely mark the intermediate cycle low. A break above 95.07 will form a weekly swing low.

April is month 8 for the yearly dollar cycle. This places the dollar in its timing band to form a yearly cycle low. Since April printed a lower low, the earliest a monthly swing low can form is in May. Then a break above the declining monthly trend line will confirm that April hosted the yearly cycle low.

The 3 year cycle peaked back on month 10. April is month 23 for the 3 year dollar cycle. February’s break of the 3 year trend line indicates that the dollar has begun its 3 year cycle decline. A failed yearly cycle is required to complete the 3 year cycle decline. Currently a break below 92.52 will form a failed yearly cycle.

However if April forms a yearly cycle low, that will ease the parameters for forming a failed yearly cycle. If a new yearly cycle is confirmed, by a break above the declining monthly trend line, then a break below April’s low will form a failed yearly cycle. The dollar’s 3 year cycle averages about 36 months. So if April is the yearly cycle low, allowing 10 – 12 months would then bring the dollar to months 33 – 35, which is right in the timing band for a 3 year cycle low.

 

Stocks:

Friday's huge Selling on Strength number indicates that stocks still need to complete their daily cycle decline.

Stocks remain above the upper daily cycle band, indicating a daily uptrend.

Following the day 29 swing low, stocks went on to print a higher high on day 34. A swing high formed on day 36 that coincided with a TSI trend line break. The True Strength Indicator then delivered a bearish zero line crossover on Friday which indicates the daily cycle decline is imminent.

Stocks broke above the declining weekly trend line on week 7 delivering our first signal that February hosted the yearly cycle low. We would like to see more bullish follow through to confirm this.

Stocks printed their lowest point in February. A monthly swing low formed in March and currently stocks are testing the declining monthly trend line. A clear and convincing break of the declining monthly trend line will confirm that February hosted the yearly cycle low, and possibly the 7 year cycle low.