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Independent Analyst
The Dollar
The dollar's daily cycle peaked on July 19, formed a swing high and closed under the 10 day MA then next day setting up a left translated daily cycle formation and signaling the daily cycle decline.
That all changed this week.
The dollar broke to a new daily cycle high on Thursday and then delivered more bullish follow through on Friday. This comes as a surprise to our cycle framework. The dollar is currently in its 5th daily so therefore we were expecting this daily cycle to left translate and fail leading to the intermediate cycle decline. But the tariffs and currency wars has caused the dollar to rally. And this changes some of our framework in the larger degree cycles.
Stocks
Stocks closed below the 10 day MA on Friday to signal that the daily cycle is in decline.
Friday was day 30 for the daily equity cycle, placing stocks in their timing band for a DCL. A break of the daily cycle trend line is needed to confirm that stocks are declining into their daily cycle low. Peaking on day 27 assures us of a right translated daily cycle formation.
However as we have been noting; this daily cycle has been characterized by the many Selling on Strength days. And it is these numerous Selling on Strength days that has me thinking it is possible to still see this daily cycle fail.
There have been over 3.6 billion in SOS days so far during this daily cycle. This type of huge Selling on Strength number is the type associated with an intermediate cycle decline. Therefore we need to be open to the possibility that a break of the daily cycle trend line will lead to an intermediate cycle decline. And what is developing on the weekly chart aligns with this scenario.
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