Stocks exploded up higher today on the prospects of a budget deal.
We discussed last night that there was precedent for a 29 day daily cycle low. Stocks followed through today gaining over 2% on the day and forming a swing low. This confirms a new daily cycle.
The 91% advancing shares adds further confirmation of a new daily cycle. Since the previous cycle formed as a right translated cycle, our expectation is to see stocks print a new higher high.
Bonds may have formed a daily cycle low today.
Bonds dropped lower today and tagged the 50 MA. Then they reversed and closed near the highs of the day. That has eased the parameters for forming a swing low. A break above 105.53 forms a swing low. Then a declining trend line break confirms a new daily cycle.
So let’s look at the dollar. The dollar closed higher today, the fourth time in five days it closed higher.
Thursday was day 5 for the daily dollar cycle. We still do not know if the dollar has initiated a new intermediate cycle or not. A close above the 80.50 level would support that scenario. If the dollar rallies past day 8, then the odds start to shift in favor of this being a new intermediate cycle. If the dollar is rejected by the 80.50 level then the dollar will continue lower in its intermediate cycle decline.