The dollar printed its highest point on Monday since the daily cycle began on August 11th. A swing high formed on Tuesday.
The dollar quickly formed a swing low on Wednesday and more bullish follow through on Friday. Considering that Monday was getting late in the dollar’s timing band I believe that Tuesday printed a stealth daily cycle low.
This was week 19 for the intermediate dollar cycle. The higher high that printed on week 19 assures us that the intermediate cycle will form in a right translated manner. Since a failed daily cycle is required for an intermediate cycle decline our expectation is to see this new daily cycle form as a left translated, failed daily cycle. If I were to guess, I would say that it looks like the dollar will run the stops above the previous 3 year peak before rolling over into an intermediate cycle decline.
September is month 4 for the new yearly cycle. The dollar has broken above the declining monthly trend line to provide final confirmation of a three year cycle low has been left behind. It is worth noting that the monthly TSI is now approaching a level that has been breached only 5 times over the past 24 years.
The daily equity cycle peaked on day 19. The lowest point since then printed on Monday, day 26. Stocks have gone on to rally to new highs.
Monday was potentially a half cycle low. If Monday was a half cycle low, then a break of the (dashed) trend line would signal a daily cycle decline. However, I believe that stocks printed an early daily cycle low, which I discussed in Thursday’s Evening Report. The big Buying on Weakness number from Friday also supports this notion.
The huge 1.114 billion Buying on Weakness number of Friday is the bigger than the type of number we would expect to see at an intermediate cycle low, let alone a daily cycle low.
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