Dollar at Risk for Intermediate Decline

Dollar has formed a weekly swing high.

The dollars weekly cycle peaked last week, which was week 26, placing the dollar deep in its timing band to seek out an intermediate cycle low. So the weekly swing high forming here has goods odds of marking the start of the intermediate cycle decline.

A failed daily cycle is required before an intermediate cycle cycle low can form. Monday was day 30 for the current daily dollar cycle. The peak on day 27 sets up a right translated daily cycle formation. Which indicates that the dollar will need to form one more daily cycle. which fails, in order to complete its intermediate cycle decline. Allowing 1 week for the dollar to complete its current daily cycle decline and another 5 to 7 weeks for an additional daily cycle should send the dollar lower through late September or early October.

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The 8/17/18 Weekend Report Preview

The Dollar

The dollar formed a swing high on Thursday and then delivered bearish follow through on Friday to signal the daily cycle decline.

Friday was day 29, placing the dollar in its timing band for a DCL. The dollar needs to close below the 10 day MA as a first confirmation that the daily cycle is in decline. Then the dollar needs to break below the (black) daily cycle trend line before it can complete its daily cycle decline. The dollar is in a daily uptrend. It will remain in its uptrend unless it closes below the lower daily cycle band.

Stocks

Stocks formed a swing low on Thursday and closed back above the 10 day MA on Friday to signal a new daily cycle.

Stocks were in their 4th daily cycle. Intermediate cycles normally are comprised of 3 to 4 daily cycles. Therefore we were expecting to see a failed daily cycle to usher in the intermediate cycle decline. Stocks printed their lowest point on Wednesday, day 33, placing stocks in their timing band for a daily cycle low. It concerns me that the decline did not cause the 10 day MA to turn lower. I suspect that the Fed intervened to prevent stocks from gaining any bearish momentum that would have lead to a failed daily cycle. So unless something happens next that changes my mind, we will label Wednesday as the DCL. Meaning that stocks are now in their 5th daily cycle.

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Also included in the Weekend Report is the Likesmoney CycleTracker

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Day of Reckoning — Delayed

This its week 27 for the intermediate equity cycle. Since only 2 out of the previous 10 intermediate cycles stretched past 26 weeks, stocks are deep in their timing band for an intermediate cycle decline. And Thursday’s action seems to have postponed the day of reckoning for another 6 – 8 weeks.

Stocks did form a weekly swing high this week. A weekly swing high this deep in the weekly cycle should send stocks into their intermediate cycle decline. However, stocks printed a daily swing low on Thursday. The daily swing low formed above the lower daily cycle band to trigger a cycle band buy signal. The daily swing low also indicates that Wednesday was the daily cycle low. A close above the 10 day MA will confirm the new daily cycle. And if a new daily cycle is confirmed, that will shift the intermediate cycle low out for another 6 to 8 weeks.

Stocks Rebounding

Stocks are rebounding off of Wednesday’s lows with the Dow leading the way by forming a swing low in the pre-market trading.

Stocks are in their timing band for a daily cycle low. Wednesday’s bullish reversal had eased the parameters for forming a swing low. The Dow has already formed a swing low this morning by rallying over 400 points from Wednesday’s low. A break above the 10 day MA, currently at 25397.60, will signal a new daily cycle.

Bullish Reversal

Stocks printed a bullish reversal on Wednesday.

Stocks closed below the daily cycle trend line on Monday and delivered bearish follow through on Wednesday to confirm the daily cycle decline. Wednesday was day 33 for the daily equity cycle, placing stocks in their timing band for a DCL. The daily cycle decline should cause the 10 day MA to turn lower before a daily cycle low forms. However, there has been over 1.5 billion Buying on Weakness since stocks began their daily cycle decline. That is a significant amount and makes we wonder if the Fed is not intervening in the market to prevent stocks from continuing into an intermediate cycle decline. Wednesday’s bullish reversal aligns with that scenario. Therefore we will need to watch for a swing low & close above the 10 day MA to signal a new daily cycle.

Oil Seeking a Bottom

Oil formed a daily swing low on Tuesday.

Oil printed its lowest point on Monday, day 38 peak, placing oil in its timing band for a daily cycle low. The peak on day 11 locks in a left translated daily cycle formation which has us expecting oil to break below the previous daily cycle low of 63.40 in order to form a failed daily cycle.

But since oil is in its timing band for a DCL, Tuesday’s swing low could trigger a new daily cycle. The TSI bullish divergence suggests that a cycle low is at hand. If oil can recover the 10 day MA and then close above the declining trend line it would confirm the new daily cycle.

Confirmation of the Daily Cycle Decline

Stocks closed below the daily cycle trend line on Monday to confirm that stocks are declining into their daily cycle low.

Monday was day 31 for the daily equity cycle, placing stocks in their timing band for a DCL. Stocks now need to turn the 10 day MA lower in order to complete its daily cycle decline. We have discussed previously that despite the right translated formation to this daily cycle that stocks could still roll over and fail in order to usher in the intermediate cycle low. That concern is based on 2 factors.

1st, stocks are in their 4th daily cycle for the current intermediate cycle. Intermediate cycles are normally embedded with either 3 or 4 daily cycles. So despite the right translated cycle formation there is still a possibility to see this daily cycle fail.

The other factor that makes it possible to see a failed daily cycle here s due to the amount of Selling on Strength days that already have occurred. The current daily cycle already has 7 SOS days the totaled over 3.6 billion in selling on strength. That is a huge number, the type of number associated with an intermediate cycle decline. However a new concern is beginning to emerge which suggests to me that stocks will need a 5th daily cycle in order to complete its intermediate cycle decline.

Since stocks have formed their daily cycle swing high, there has been over 1 billion in Bowing on Weakness. That is a big number already and it suggests to me that traders are ready to “buy the dip”. A likely spot for that to occur would be around the 50 day MA. If that were to happen then stocks would not be able to form a failed daily cycle at this point therefore necessitating the need for one more daily cycle to allow stocks to complete an intermediate cycle decline.

The 8/10/18 Weekend Report Preview

Stocks

We will begin the Weekend Report Preview this week with 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.

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.

I breakdown these changes to the larger degree cycles in the Weekend Report.

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The entire Weekend Report can be found at Likesmoney Subscription Services

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

For subscribers click here.

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

Miner Disappointment

We discussed yesterday that Wednesday’s narrow range day had eased the parameters for forming a swing low. And with the Miners being late in their timing band for a DCL that a swing low had good odds of marking the daily cycle low.

The Miners did delver a buy signal on Thursday by forming a swing low (a stop should be placed below Wednesday’s low). What was disappointing was after forming a swing low, the Miners closed lower for the day.

Wednesday, day 28, is still the lowest point following the day 6 peak. That places the Miners deep in their timing band for a DCL. Day 28 may still be the DCL, the Miners will need to close convincingly above the declining trend line to confirm. However, if the Miners break below Wednesday’s low then honor your stop and wait for the next Miner set up.

Miner Set Up

We discussed yesterday that the Miners are in their timing band for a daily and intermediate cycle low. And what we wanted to see was a narrow range bullish reversal to ease the parameters for forming a swing low. And the Miners delivered.

Wednesday’s narrow range bullish candle sets the Miners up for a low risk entry. A break above 20.80 will form a swing low to signal a new daily cycle. Stops can be placed below Wednesday’s low. Then a break above the declining trend line will confirm the new daily cycle.