The 11/05/13 Morning Report

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After a 16 week intermediate cycle decline the dollar finally found its footing last week and rocketed into an new intermediate cycle.

DXY00 weekly

Last week saw the dollar print a weekly swing low and broke above the declining weekly trend line to confirm a new intermediate cycle.

Looking at it from a daily cycle perspective we can see that the dollar ran into resistance at the 81 level on Monday.

DXY00 daily

While the dollar has also formed a swing high in the overnight, I do not think this rally is over. Since this is the first daily cycle of a new intermediate cycle we can expect the dollar to form a right translated daily cycle here. Which means we will likely see this daily cycle peak after day 12. I suspect that we will see some consolidation here or perhaps a bull flag to allow the dollar to reenergize for the next leg up.

Equities have entered week 19 of the intermediate equity cycle. After a brief pull back last week stocks appear ready to make another push higher.

$ SPX Sharp Charts Workbench Stock Charts com 2

Monday was day 18 for the daily equity cycle and stocks formed a swing low. Friday may have formed a half cycle low and set the daily cycle trend line. A break below this trend line will signal that the daily cycle is in decline. If stocks fail to make a higher high here, then a left translated cycle forming leading into an intermediate cycle decline is still a possibility.

However, stocks appear poised to make a break higher. Should stocks print a new high after day 20, that will virtually lock in a right translated nature to this daily cycle. Thus postponing the expectation of an intermediate cycle decline until the next daily cycle.


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