As we discussed this morning, the dollar broke out above of its declining trend line to confirm a new daily cycle.
Since the previous daily cycle formed as a left translated daily cycle, there is no cycle expectation for the next daily cycle to print a higher daily cycle high. And that dovetails into our framework that calls for the dollar to decline into a yearly low. So I expect to see this new daily cycle form as a left translated cycle.
Gold reacted to the dollar by tanking.
Gold has been declining since late October. Monday was either day 33 or possibly day 13. What makes this difficult to interpret is the lack of a clear and convincing trend line break since late October. Trend line breaks have served us well when combined with timing bands to help identify cycle lows. I suspect that regardless of the daily count, we will see gold continue lower until the dollar finally rolls over.
Meanwhile, stocks formed a swing high today.
Monday was day 37 for the daily equity cycle. Stocks are in the timing band to print a daily cycle low. The swing high combined with a trend line break signals a daily cycle decline. In fact, the break lower was enough to form a weekly swing high.
Last week was week 22. Normally a weekly swing high this late in the intermediate cycle would mark the cycle peak. However, since this current daily cycle peaked on day 36, it has virtually locked in a right translated nature. Which means our cyclical expectation after a brief correction is to see one more daily cycle printing a higher daily cycle high.
It seems that the Buying on Weakness print agrees.
The 167 million Buying on Weakness printed today suggests that the Big Boys see one more pop higher before this intermediate cycle rolls over.