Stocks Bullishly Crossed The Line

Stocks have been consolidating for the past 7 weeks since closing at a new all-time high on May 7th.

Stocks managed to close above the May 7th high on day 23 of the last daily cycle. Then declined into the 26 day DCL. Tuesday is day 4 of a new daily cycle and stocks have closed at a new all-time high. Breaking out to a new daily cycle this early in a daily cycle gives stocks time to rally.

If stocks deliver bullish follow through this should lead to a bullish trending move, 4240 can then be used as the stop.

Bullish Response

Stocks formed a swing low on Monday to signal a new daily cycle.

Stocks responded bullishly on Tuesday by closing above the 10 day MA so we will label day 26 as the DCL.

Stocks also closed above the 4240 level on Tuesday. If stocks deliver bullish follow through this should lead to a bullish trending move and 4240 can then be used as the stop.

Stocks Renew Uptrend

Stocks formed a swing low on Monday.

Stocks printed its lowest point on Friday, day 26, which is a bit early for a DCL. Stocks have been in a daily uptrend that has been characterized by highs forming above the upper daily cycle band and lows forming above the lower daily cycle band. Monday’s swing low formed above the lower daily to indicate that stocks remain in their daily uptrend and trigger a cycle band buy signal. A close above the 10 day MA will have us label day 26 as the DCL.

And if stocks can close back above the 4240 level and deliver bullish follow through this should lead to a bullish trending move.

The Weekend Report Preview

Stocks

Stocks closed below the 10 day MA on Tuesday and the the 50 day MA on Friday to confirm the daily cycle decline.

Friday was day 26 for the daily equity cycle, which is still a bit early to expect a DCL. The peak on day 23 indicates a right translated daily cycle formation which aligns with stocks being in a daily uptrend. If stocks form a swing low above the lower daily cycle band that would signal a continuation of the daily uptrend and trigger a cycle band buy signal.

The Dollar

The dollar delivered a bullish surprise on Wednesday.

Prior to Wednesday the dollar had been in a daily downtrend characterized by highs forming below the upper daily cycle band and lows forming below the lower daily cycle band. The dollar delivered a bullish surprise on Wednesday by closing convincingly above the 50 day MA and the upper daily cycle band. Closing above the upper daily cycle band ends the daily downtrend and begins a new daily uptrend. Then the dollar delivered bullish follow through on Thursday by closing convincingly above the 200 day MA. And then higher again on Friday. This breaks the pattern of lower highs and begins a pattern of higher highs. 

This new pattern of higher highs might be a game changer. It opens the door to January not only being the yearly cycle low, but the 3 year cycle low as well. Which is something that I discuss in the Weekend Report.

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Dollar Delivers Bullish Surprise

The dollar delivered a bullish surprise on Wednesday and bullish follow through on Thursday.

Prior to Wednesday the dollar had been in a daily downtrend characterized by highs forming below the upper daily cycle band and lows forming below the lower daily cycle band. The dollar delivered a bullish surprise on Wednesday by closing convincingly above the 50 day MA and the upper daily cycle band. Closing above the upper daily cycle band ends the daily downtrend and begins a new daily uptrend. Then the dollar delivered bullish follow through on Thursday by closing convincingly above the 200 day MA. This breaks the patters of lower highs and beings a pattern of higher highs.

Wednesday was only day 16 for the daily cycle. Which is still early enough in the daily cycle for the dollar to continue higher. However, the dollar became rather stretched above the 10 day MA and the 50 day MA over the past two days and may need to consolidate to allow the 10 day MA to catch up to price.

 Bullish surprises tend to happen during an intermediate cycle advance. All of this bullish action of the dollar confirms that the late May DCL was also the intermediate cycle low, which places the dollar on week 3 of the new intermediate cycle. In the Weekend Report I plan to discuss what I will need to see to convince me if the dollar has also begun a new 3 year cycle

Possible ‘Sell The News’

Fed Chairman Jerome Powell is scheduled to speak on Wednesday.

Stocks broke out to a new high last week, but have not delivered any bullish follow through. We are starting to see bearish divergences developing on the oscillators. This has me concerned that Wednesday’s statement might trigger a ‘sell the news’ response. A swing high and close below the 4240 breakout level would indicate the daily cycle decline.

Gold Extends It Daily Cycle Decline

Gold broke below the day 45 low on Monday to form a lower low.

While gold formed a swing low off of the day 45 low last week, it did not deliver any bullish follow through. So with gold undercutting the day 45 low on Monday, that extends the daily cycle decline. That makes Monday day 51 – which is very deep in its timing band for a DCL.

Since gold reversed off of the 200 day MA on Monday, it is possible to see gold form a swing low on Tuesday to signal the DCL. But the weekly chart suggests another possibility

Gold became stretched above both the 50 week MA and the 10 week MA on week 12. The current daily cycle decline caused gold to tag the 50 week MA and is allowing the 10 week MA to catch up to price. We could see gold tag the 10 week MA. At 55 days, if gold forms a daily swing low, after tagging the 10 week MA, that would have good odds of marking the DCL.

The 6/12/21 Weekend Report Preview

The Dollar

After losing the 10 day MA on Monday, the dollar recovered it on Tuesday and then trended higher for the week.

Friday was day 12 for the dollar’s daily cycle. A break above the day 7 high on 90.63 will begin to shift the odds towards a right translated daily cycle formation. However, the dollar currently in a daily downtrend. The dollar will remain in its daily downtrend unless it closes above the upper daily cycle band.

Stocks

Stocks closed at a new all-time high on Friday.

Stocks have been consolidating for the past 2 weeks just below the all time high of 4238.04. Stocks broke above this on Thursday then closed at a new all-time high on Friday.

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After consolidating for the past 2 months, stocks are beginning to break out. If stocks deliver bullish follow through this should lead to a bullish trending move. Stops can be raised to the breakout level of 4240.

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Miners Deliver Buy Signal

The Miners regained the 10 day MA on Thursday.

The Miners printed their lowest point on Thursday, day 28. This places them in their timing band for a daily cycle low. Thursday’s bullish candle is a buy signal since regaining the 10 day MA this late in the daily cycle has good odds of marking the DCL. A swing low will have us label day 28 as the DCL. The Miners are currently in a daily uptrend. If they form a swing low above the lower daily cycle band, they will remain in their daily uptrend and trigger a cycle band buy signal. A break above 38.99 will form a daily swing low.

Right Translation

Stocks broke out to a new daily cycle high on Tuesday. The new high on day 18 begins to shift the odds towards a right translated daily cycle formation.

We have been watching RSI as stocks emerged from their day 48 DCL. Just prior to the day 48 DCL, RSI became overbought twice. As it became overbought it delivered quick bearish reversals. Now we are seeing a change in behavior. RSI became overbought on Friday. However it did not deliver a quick bearish reversal. If RSI embeds in overbought that would indicate that stocks are resuming their intermediate cycle advance. Stocks have been consolidating for the past 2 weeks just below the all time high of 4238.04. A bullish break above this resistance level could lead to a trending move.