Decision Point

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On Monday we discussed how gold had little wiggle room before coming to a decision point. Well today gold made a decision and broke lower.

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Thursday was day 14 for thee daily gold cycle. Gold broke lower today losing the 200 day MA and also closing below the previous daily cycle low. That confirms a failed daily cycle. And at 14 days, gold can go lower for another 4 to 11 days.

And the other takeaway today is that gold broke lower on a day that the dollar printed a bearish reversal.

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Thursday was day 9 for the daily dollar cycle. While the dollar printed a higher high, it also printed a bearish reversal outside of the Bollinger Band. Despite the dollar’s weakness, gold maybe telling us a big move is in store for gold, which we can see on the weekly chart.

1 gold weeklyhttp://postimg.org/image/z1cqln12f/

The intermediate gold cycle peaked on week 5. The failed daily cycle on week 11 signals that gold has entered its intermediate cycle decline. And at week 11, gold as another 6 more weeks until it enters its timing band for an intermediate low which can extend out to week 25. That is enough time to allow for the current daily cycle and one additional daily cycle to unfold.

Food for Thought

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Gold’s daily cycle peaked on day 5. The bearish follow through to Tuesday’s trend line break confirms that gold has entered its daily cycle decline.

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Wednesday was day 13 for the daily gold cycle. Gold still have 5 more days before entering its timing band for printing a daily cycle low. And they day 5 peak has locked in a left translated nature to this daily cycle. Therefore our expectation is to see this daily cycle peak below the previous daily cycle low of 1281.00

However it is prudent to acknowledge that the 200 day MA lies 7 points south of today’s close. And a bullish reversal off the 200 day MA could signal an early daily cycle low. And the relative strength in the Miners makes it easier to consider this possibility.

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The Miner’s daily cycle peaked on day 6 with Wednesday being day 11. And even though gold is in a confirmed left translated daily cycle decline, the Miners seem to have found support at the 26.50 level and appears to have a date with the rising 50 day MA. A bullish reversal off the 50 day MA that closes the gap would deliver a bullish signal and will force us to consider that an early 12 day daily cycle low has occurred.

Verification

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The dollar broke out to a new high on Tuesday.

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The dollar failed to deliver a break of the daily cycle trend line as it sought out its daily cycle low. But it did breach the accelerated (red) trend line. The accelerated trend line breach deep in the timing band for a DCL coupled with a break to new highs verifies 8/08 as a 27 day, right translated daily cycle low. And that makes Tuesday day 7 of the new daily cycle.

The dollar’s strength sent gold lower today.

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Tuesday was day 12 for gold’s daily cycle. Gold peaked on day 5 then drifted sideways. Yesterday gold tested the daily cycle trend line. Today’s trend line breach signals that gold has now entered its daily cycle decline. With a day 5 peak, gold appears to have locked in a left translated nature to this daily cycle. That gives us the expectation that gold will break below the previous daily cycle low of 1281.00. With gold on day 11 we could see gold trend lower for the next 7 to 15 sessions.

And it is not too surprising that the day that gold breached its daily cycle trend line (signaling an intermediate decline) is the same day that stocks confirmed the new intermediate cycle.

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Tuesday was day 8 for the daily equity cycle. Stocks have now been up 6 of the last 8 days. The break of the declining weekly cycle trend line verifies that stocks have left behind an intermediate cycle low. Following a right translated intermediate cycle has us expecting to see this new intermediate cycle go to print a higher weekly cycle high.

Wiggle Room …

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Gold has been forming a mini weekly triangle consolidation over the past 4 weeks. As gold approaches the apex of its triangle, it is running out of wiggle room.

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Gold has entered week 11 of its intermediate cycle. There are some definite bearish signals which include a weekly swing high, a bearish crossover on the True Strength Indicator and a bearish zero line crossover on the TSI.

Still the weekly chart shows that gold regained the weekly 50 MA two weeks ago and has maintained it since. Gold is approaching the point for a break in consolidation that should lead to a multi-week move. Perhaps we can glean gold’s intentions from the daily chart.

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Gold’s daily cycle peaked on day 5 and then formed a daily swing high. Today saw gold loose the 50 day MA and deliver a zero line crossover, which are signals of a daily cycle decline. A break of the daily cycle trend line confirms the daily cycle decline. And a break of the daily cycle trend line will lock in a left translated nature to this cycle and signal the intermediate cycle decline. And at week 11, gold could see an another 6 – 14 more weeks of downside.

The 8/15/14 Weekend Report Preview

The Dollar
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The dollar’s daily cycle has peaked on day 25. The lowest point following the day 25 peaked printed on day 27.

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This is beginning to look just like the previous daily cycle. There was a day 19 peak followed by a low printing on day 20. The ensuing daily cycle then failed to print a higher high before printing a failed, left translated daily cycle low on day 17.

Since printing the day 27 low on the previous Friday the dollar has been consolidating the recent rally. A break above the day 25 peak of 81.78 confirms a new daily cycle. A break below the day 27 low of 81.32 extends the daily cycle decline. The dollar may have revealed its intention on Friday with the bearish breach of the developing trend line. Which has implications for gold, which we will discuss in the Weekend Report.

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Setting aside the daily cycle counts and backing out our view we can see that the dollar appears to be repeating the pattern of the rally out of the May pivot. Our expectation has not changed. We expect a back test of the triangle consolidation and then the dollar will continue to rally.

Stocks
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Stocks closed above the declining trend line on Friday to confirm a new daily cycle.

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Stocks have rallied approximately 2.6% off the day 39 low and regained the 10 day MA. Stocks were not able to close above the 50 day MA and we may see stocks crawl along the 50 MA allowing for the 10 MA to catch up before making another run higher.

The entire Weekend Report can be found at Likesmoney Subscription Services

The Weekend Report discusses Dollar, Stocks, Gold, Miners, The CRB Index, & Bonds in terms of daily, weekly and yearly cycles.
Also included in the Weekend Report is the Likesmoney CycleTracker

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A Bullish Case for Gold

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The Bullish case for gold begins with what is unfolding in the dollar.

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The dollar’s daily cycle peaked last Wednesday, which was day 25 and printed a bullish reversal on Friday. While the dollar failed to break below the daily cycle trend line to confirm a new daily cycle, it did breach the accelerated (red) trend line. And with the buck rallying out of a three year low, that may be all the correction we will see for the first daily cycle. Then a break to new highs will confirm Friday as the day 27 daily cycle low.

At week 14, a new daily cycle could lead into an intermediate cycle decline.

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The dollar is currently on week 14 of its intermediate cycle. If the new daily cycle began on Monday, and allowing for the daily cycle to unfold for 4 to 5 weeks would bring the weekly cycle out to about weeks 18 or 19. Which is in the early part of the timing band for an intermediate cycle low. So a new daily cycle can potentially lead to the intermediate cycle decline.

Also notice that the weekly True Strength Indicator has exceeded the level that has seen other intermediate cycles roll over. I think that this is setting up where we will see one more push higher on the daily cycle. Which will peak on or before day 8. Then we will see the dollar begin its decline which will lead into an intermediate cycle decline. Predicated on the assumption that the dollar left behind a 3 year low in May, the intermediate decline should back test the extended consolidation zone and possibly meet the rising 50 week MA.

Here is how this relates to gold:

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As shown above, gold tends to rally as the dollar declines into an intermediate cycle low.

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So a quick pop higher by the dollar could see gold decline to the developing daily cycle trend line. As the dollar rolls over, that will help to send gold to new daily cycle highs.

It should be noted that a break of the dashed trend line signals a daily cycle decline for gold.

Now a quick word on bonds.

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Bonds broke out to a new daily cycle high today. The daily cycle can still form in a left translated manner. But, a new high on day 9 begins to shift the likelihood of this daily cycle from forming as a left translated cycle to a right translated one. Which causes the daily cycle trend line to shift, as well.

The new high today causes the weekly cycle to set a new high on week 6.However, there are still bearish TSI divergences on both the daily and weekly charts.

If the daily cycle does not rollover in a day or two, then not only will this daily cycle form in a right translated manner it would also postpone the intermediate cycle decline to the next daily cycle.

Bullish Progress

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While we wait on a declining trend line break to signal a new daily cycle, stocks delivered more signals of a new daily cycle.

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Regaining the 10 MA and printing a bullish TSI zero line crossover both help to confirm a new daily cycle.

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Stocks also have formed a weekly swing low. Since stocks are on the outer edge of its timing band for an intermediate cycle low, this weekly swing low has good odds of marking the intermediate cycle low. And following a right translated weekly cycle our expectation is to see stocks print a higher weekly cycle high.

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The Miners printed a higher high on Wedneday, day 6. A break above the upper trend line delivers a bullish resolution to this consolidation. Rejection here could lead to a left translated, failed daily cycle

Bonds are Bound Lower

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Bonds broke out to a higher high on Friday. Tuesday saw bonds form a swing high.
The question is are bonds merely setting the daily cycle trend line before one more push higher or are bonds rolling over?

AS we discussed in the Weekend Report, August is month 8 for the yearly bond cycle and bonds printed a higher high. Bonds will enter the timing band for a yearly cycle low in September. Allowing for the conclusion of the current weekly cycle would take bonds out about October or early November. Which would be months 10 and 11. That would place bonds right in the timing band for their yearly cycle low.

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A failed intermediate cycle is required for the yearly cycle decline. Left translated, failed weekly cycles typically peak on or before week 8. The current intermediate cycle peak is week 5 and this is week 6. A break below 113.68 forms a weekly swing high and likely will signal the intermediate cycle decline.

Which brings us to today.

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As was mentioned earlier, bonds printed a higher high on Friday. That higher high reversed intraday and printed a bearish reversal. Bonds not only formed a swing high today but also broke below the developing daily cycle trend line.

The cyclical framework has aligned in such a way that a failed daily cycle should lead to a left translated weekly cycle which will result in a yearly cycle decline. A break below the previous daily cycle low of 113.05 forms a failed daily cycle and sets this all in motion.

Stretched Dollar Cycle

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The dollar’s daily cycle peaked on Wednesday, which was day 25. A swing high formed on Thursday with more bearish follow through on Friday, day 27.

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The dollar’s timing band for a daily cycle low runs from day 18 to day 25. So by Friday the dollar’s daily cycle was beginning to get stretched. Since it is so late in the dollar’s daily cycle, the reversal left behind on Friday could make the daily cycle low — if there was a daily cycle trend line break. We have been watching for a break of the dashed daily cycle trend line to confirm the daily cycle decline, which hasn’t happened.

However, the dollar has broken below the accelerated (red) daily cycle trend line. With the dollar potentially rallying out of a 3 year low, perhaps this is the only correction that we will see here.

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If the dollar breaks above the developing declining trend line then that will signal that Friday marked the daily cycle low. A break above last Wednesday’s high of 81.78 will confirm the dollar’s new daily cycle.

Keep on mind that this is week 14 for the intermediate dollar cycle. One more daily cycle should escort the dollar right into its timing band for an intermediate cycle low. Therefore we will need to watch for a left translated daily cycle developing once a new daily cycle is confirmed.

Stocks provided some bullish follow through to the swing low that printed on Friday.

Stocks managed to regain the 10 day MA today.

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Regaining the 10 day MA provides more confirmation that Thursday marked the daily cycle low. The weak close along with the 67 million Selling on Strength that printed today suggests more volatility ahead for stocks.

The 8/08/14 Weekend Report Preview

up arrow

The Dollar
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The swing high off the day 25 peak signals that a daily cycle decline is imminent.

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Being this late in the daily cycle suggests a brief decline. Still the dollar should break below the daily cycle trend line before printing its daily cycle low.

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Our framework has the dollar printing a three year low in May. Therefore we should see the dollar back test the consolidation before continuing higher.

Stocks
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Stocks printed their lowest point on Thursday since the day 29 peak. Thursday was day 39 and stocks are in their timing band to print a daily cycle low. Therefore, the swing low formed on Friday signals a new daily cycle.

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Stocks delivered a bullish crossover on the TSI which supports the notion that Friday was day 1 of a new daily cycle. While we are looking for a break of the declining trend line to confirm a new daily cycle, regaining the 10 day MA adds another confirmation.

The entire Weekend Report can be found at Likesmoney Subscription Services

The Weekend Report discusses Dollar, Stocks, Gold, Miners, The CRB Index, & Bonds in terms of daily, weekly and yearly cycles.
Also included in the Weekend Report is the Likesmoney CycleTracker

To subscribe: http://likesmoneysubscriptionservices.wordpress.com/

For subscribers click here.

You can email me at likesmoney@gmail.com to receive a sample copy of the Weekend Report