Biotech Beginning To Be Bullish

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Biotech printed its lowest point on 11/14 following the day 10 peak. It formed a daily swing low and closed above the lower daily cycle band on Wednesday to confirm a new daily cycle.

The decline into the day 37 DCL broke below the previous daily cycle low causing biotech to form a failed daily cycle. So the daily swing low also signals a potential beginning of a new intermediate cycle.

Last week biotech printed a bullish reversal off of support from the rising 50 week MA. And biotech has now formed a weekly swing low to signal that this is week 1 of a new intermediate cycle.

Since emerging from the October 2016 ICL low biotech has established a weekly uptrend that is characterized by peaks above the upper weekly cycle band and lows above the lower weekly cycle band. The big picture is that after peaking in 2015, biotech formed a massive 29 month cup and handle consolidation pattern. And the weekly swing low sets up a low risk entry for the potential break out.

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Clear & Convincing Evidence

Stocks closed convincingly above the 10 day MA to confirm that Tues was day 4 of the new daily cycle.

Stocks continue to close above the upper daily cycle band indicating a daily uptrend. Stocks will remain in its uptrend unless they close below the lower daily cycle band.

We can also see the both the Transports & the Russell have convincingly confirmed new daily cycles.

Like stocks, both the Transports & the Russell printed their lowest cyclical points last Wednesday. They have now both formed swing lows and closed convincingly above their declining trend lines to confirm their new daily cycles.

Evidence of a Daily Cycle Low

Stocks printed their lowest point on Wednesday, following the day 54 peak. At 60 days, that placed stocks in their timing band for a daily cycle low. While stocks did form a swing low on Thursday, the 701 million selling on strength had us skeptical if a daily cycle low formed.

Stocks dropped on Friday to back tested the declining trend line. Stocks recovered on Monday. While they did not close back above the 10 day MA, stocks continue to develop bullishly. They are close to delivering a TSI bullish zero line crossover, which would provide more evidence that day 60 hosted the DCL.

The Advance-Decline did regain its 10 day MA. There is also a bullish divergence developing on the AD Line and they are leading stocks higher.

And the Semi’s have printed a new high. The Semi’s have been leading stocks and now that they have printed a new high, stocks likely to follow.

The 11/17/17 Weekend Report Preview

The Dollar
$$$

The dollar’s daily cycle peaked on day 17. It printed is lowest on Wednesday, day 23, forming a bullish reversal off of support from the 50 day MA.

The dollar is in its timing band for a DCL. It did form a swing low on Thursday, but broke lower on Friday. The dollar still needs to close back above the declining 10 day MA in order to confirm that day 23 hosted the daily cycle low. The dollar did not close below the lower daily cycle band on Friday so it does remain in a daily uptrend. It will continue in its uptrend unless it closes below the lower daily cycle band.

Stocks
stocks

After peaking on day 54 stocks broke lower, printing their lowest point on Wednesday. At 60 days, that places stocks late in their timing band for a daily cycle low.

Stocks formed a swing low on Thursday that broke above the declining trend line and closed above the 10 day MA to signal that day 60 was the daily cycle low.

We need to keep in mind that stocks printed a large SOS number on Thursday. The 701 million selling on strength is the type of number that will be printed prior to an intermediate cycle decline. It is certainly not the type of number the we typically see as stocks emerge from a daily cycle low. Stocks followed that up by closing back below the 10 day MA on Friday. The take away here is there is uncertainty of whether or not stocks still have more to correct or if stocks are preparing to form a left translated daily cycle. But for now, Stocks continue to close above the upper daily cycle band indicating that they are in a daily uptrend. Stocks will remain in their daily uptrend unless they close below the lower daily cycle band.

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S.O.S. Signal

Stocks closed below the upper daily cycle band on Wednesday to confirm that it was day 60 of an extended daily cycle.

Stocks formed a swing low on Thursday. Stocks also broke clearly above the declining trend line to close above the declining 10 day MA. With stocks being so late in their timing band this indicates that Thursday should be day 1 of the new daily cycle.

We can also see that both the Russell and the Transports also managed to close above their respective declining 10 day MA’s to signal new daily cycles.

And with this type of agreement normally I would feel pretty confident that Thursday was day 1 of a new daily cycle. But there was a bearish signal that was delivered on Thursday.

Stocks printed a large SOS number on Thursday. The 701 million selling on strength is the type of number that will be printed prior to an intermediate cycle decline. It is certainly not the type of number the we typically see as stocks emerge from a daily cycle low.

So whether or not stocks still have more to correct or if stocks are preparing to form a left translated daily cycle remains unknown.

But the 701 million SOS clearly indicates …

Bullish Expectations


We have been discussing the status of the daily equity cycle in regards to whether day 45 hosted a daily cycle low. Last week we listed what needed to occur for us to change the labeling.

Last Thursday we outlined that the daily cycle is extended past day 45 if the following occurred:
* If RSI broke below the dashed blue line
* Stocks close below the upper daily cycle band
* Deliver a bearish TSI Zero Line Crossover

Since two of the three has now happened that has now shifted my thinking that this is an extended daily cycle with Tuesday being day 59.

RSI has now made a lower low and the TSI has delivered a bearish zero line crossover. Both signal that stocks are now declining into their daily cycle low. With a peak on day 54 this is an extremely right translated daily cycle. We should see stocks break below 2566.33 in order to complete its daily cycle decline. Stocks are currently very late in their timing band for a daily cycle low and have already corrected for 5 days. So a swing low and a break above the declining trend line will confirm a new daily cycle.

The big picture is that stocks are in a daily and weekly uptrend. They will remain in their uptrend unless the close below the lower cycle band. Therefore a swing low above the lower cycle band will be a buy signal.

Bullish Bias


On Thursday we discussed how we were unclear if day 45 hosted the daily cycle low. While we still lack clarity, stocks do have a bullish bias.

A break below Thursday’s low of 2566.33 would provide concrete evidence that stocks were declining into an extended daily cycle low. And a break above last Tuesday’s high of 2597.02 would eliminate any doubt that day 45 hosted the daily cycle low. Since neither has occurred we will look at what is available.

First off we can say that stocks still closed below the 10 day MA, which is bearish. But that is countered by stocks forming a swing low and closing above Thursday’s high. We can see that the RSI is beginning to turn higher. Stocks also formed a bullish engulfing candle on Monday. And stocks continue to close above the upper daily cycle band, remaining in a daily uptrend. All of this points to a bullish bias for stocks.

The 11/10/17 Weekend Report Preview

The Dollar
$$$

The dollar printed an new high on Tues, day 17, assuring us of a right translated cycle formation.

The dollar formed daily swing high and closed below the 10 day MA on Thursday. The dollar continued lower on Friday to breach the daily cycle trend line and turn the 10 day MA lower which indicates that the dollar is ready to decline into its daily cycle low. Still, the dollar is in a daily uptrend & will continue in its uptrend unless it closes below the lower daily cycle band.

Stocks
stocks

On Thursday we discussed how the bearish divergences on the daily oscillators was calling into question whether day 45 hosted the DCL.

So we specified the criteria that needed to be met to change the label of a day 45 DCL.

Stocks did not deliver the bearish follow through that was necessary to meet the criteria for changing the day 45 RT label. Which makes Friday day 12 for the daily equity cycle.

And the significant Buying on Weakness number supports the day 12 labeling. Stocks continue to close above the upper daily cycle band remaining firmly in a daily uptrend. Stocks will continue in their uptrend unless they close below the lower daily cycle band.

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 the Weekend Report

Looking for Clarity

Stocks formed a swing high on Thursday.

Thursday’s swing high makes it unclear if day 45 hosted a daily cycle low or if this day 56 of an extended daily cycle.

The Russell and the Transports are still seeking their DCLS in their respective extended daily cycles. A case can be made based on the the Russell and Transports that the general market still needs to deliver a clear and convincing decline into a daily cycle low.

However …

The Nasdaq 100 shows that the decline in late October:
* Closed below the 10 day MA
* Closed below the upper daily cycle band
* Turned the 10 day MA lower

All of which makes a strong case that the NDX is now on day 11 of the new daily cycle. So A case can be made that stocks are, like the NDX 100, on day 11 of its new daily cycle.

We need to keep in mind that stocks are in a daily uptrend and will remain in its uptrend until it closes below the lower daily cycle band. So unless stocks deliver a clear and convincing decline into a daily cycle low I believe that we need to proceed with day 45 as being labeled the DCL.

What would change that view would be if RSI breaks below the dashed blue line, stocks close below the upper daily cycle band, and deliver a bearish TSI Zero Line Crossover, then that would indicate that Thurs was day 56 of an extended cycle and that stocks are declining into an extended daily cycle low.

Proceed With Caution

Stocks printed a new daily daily cycle high on Tuesday. However, there are some bearish divergences that are developing that we will take a look at.

The bearish divergences that are developing on the momentum oscillators are often associated with a cycle decline.

There is also a bearish divergence that has been developing on the Advance-Decline line which which often heralds a daily cycle decline.

What this means is that we need to re-look at the decline into the day 45 low. While the day 45 low was in the timing band for a DCL, it did not satisfy other criteria that we look for in a daily cycle low such as:
* Causing the 10 day MA to turn lower
* A bearish TSI Zero Line Crossover
* A fib tracement of at least 38%

That leaves us with a couple of scenario’s to consider:
1) Day 45 did not host the DCL
Under this scenario, that places stocks very deep into their timing band for a daily cycle low. Therefore any daily cycle decline at this point would likely to be brief.

2) The second scenario is if, in fact, day 45 was the DCL. That would make Tuesday day 9 of a new daily cycle. In either scenario, a close below the upper daily cycle band would signal that the daily cycle is in decline. But under the second scenario with stocks being at only day 9, that leaves 4 – 6 weeks before stocks would be in their timing band for a daily cycle low.

In either scenario, selling on a close below the upper daily cycle band would limit the downside risk. Long positions can be re-entered if the decline did not close below the lower daily cycle band and stocks closed back above the 10 day MA.

But if stocks close below the lower daily cycle band, then this is not the time to throw caution to the wind …