Weekend Report Preview

The Dollar

The last time the dollar delivered clarity for a daily cycle low was the September DCL.

Since the September low, the dollar has been firmly in a daily uptrend. Assuming that day 25 was the DCL, that sets up a possible left translated daily cycle formation for the dollar.  A break below the daily cycle trend line would signal the daily cycle decline.

This was week 10 for the intermediate dollar cycle. Week 8 remains as the weekly cycle peak.  But a break above the week 8 peak of 97.53 will begin to shift the odds towards a right translated weekly cycle formation. The dollar is in a weekly uptrend.  It will remain in its weekly uptrend until it closes below the lower weekly cycle band.

The dollar closed above the upper monthly cycle band in October and then closed higher for November.  The new high in November, month 9, shifts the odds towards a right translated yearly cycle formation.  At 9 months, that places the dollar in its timing band for a yearly cycle low. Since the dollar printed a new high in November, the earliest a monthly swing high can form will be in December.

Closing above the upper monthly cycle band in October confirms that February hosted the 3 year cycle low. The 15 year super cycle decline has begun.  As long as the dollar does not form a higher yearly cycle high then it will remain in its 15 year super cycle decline. 

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. The topping pattern in 2001 is similar to the current set up.   The confirmation of a failed 3 year cycle back in August, 2017 confirms that the dollar has begun its 15 year super cycle decline (bear market).  Therefore we are looking for the dollar to be rejected by the declining multi year trend line to continue its decline into the 15 year super cycle low.

 

Stocks

Following the day 7 peak, stocks closed below both the 200 DMA and the 10 DMA and turned the 10 DMA lower to indicate that stocks were declining into a daily cycle low. 

I am not comfortable labeling day 18 as the DCL.  However, cycles often will balance out an extended daily cycle with a shortened cycle and the previous cycle did extend out to day 52. Setting aside the daily cycle count, the day 18 low does satisfy the other criteria for a DCL.  But due to the proximity of the 200 DMA and the 50 DMA, I would like to see a close above these two moving averages for confirmation of the DCL. 

Stocks delivered a signal Friday for more volatility.  Stocks printed 616 million selling on strength on Friday. Stocks are in a daily downtrend and facing resistance from both the 200 MA and the declining 50 day MA.  Rejection by the 200 MA would indicate that day 18 was a half cycle low.

Stocks delivered bullish news on the weekly chart. Stocks closed back above the 50 week MA and also closed above the declining trend line.  While I would like to see a clear and convincing break, this does help to confirm week 38 as the ICL. Stocks are in a weekly downtrend.  They will remain in its downtrend unless they close above the upper weekly cycle band.

Stocks peaked in September, month 7.  They formed a swing high in October, month 8, placing stocks the early part of its timing band for a yearly cycle low.  The huge bearish monthly swing high clearly signals the yearly cycle decline. The 10 month MA has also begun to turn lower, which is another indicator of the yearly cycle decline.

Stocks managed to form a bullish monthly reversal in November.  Stocks would need to break above the October high in order to form a monthly swing low to signal a new yearly cycle.  Stocks remain firmly in a yearly uptrend.  If the monthly swing low forms above the lower monthly cycle band, then stocks will continue in their monthly uptrend.