This daily cycle for the CRB Index is like a rocket.
Tuesday was day 26 for the daily cycle for the CRB Index. And it has basically gone straight up. And now 26 days into the daily cycle it posted the biggest day of the cycle. We are likely witnessing a final push that will exhaust the buyers. The CRB is in the timing band for a daily cycle low. Once a daily cycle decline begins, I expect a brief decline since it is getting late in the daily cycle. A swing high and trend line break will signal a daily cycle decline. I suspect that the CRB will peak once the dollar’s daily cycle finds a bottom.
When we looked at the dollar this morning we saw that a swing low had formed. But the dollar could not hold on to its early gains. Now in the overnight the dollar has printed a lower low. That negates the swing high formed earlier.
Tuesday was day 17. Wednesday, day 18, the dollar enters its timing band for a daily cycle low. We will now watch for a swing low accompanied by a declining trend line break to spot the daily cycle low.
Stocks printed a higher high today, but there are some concerns that we need to look at.
I believe that stocks just printed an intermediate cycle low. Stocks generally rally for the first 4 – 6 weeks after emerging from an intermediate cycle low. Tuesday was day 8 for the daily equity cycle and stocks have also shot out of their cycle low like a rocket. This pace will not be sustainable and some type of pullback is necessary.
The transports already look weak.
On a day were stocks printed a new daily cycle high, the transports formed a swing high. They are also about to deliver a bearish crossover on the True Strength Indicator which indicates that the transports are headed lower.
Getting back to stocks, I wanted to look at at the bigger picture.
The True Strength Indicator has reached a level that has marked previous daily cycle peaks, or saw equities consolidate by a sideways move. This suggests that this initial thrust out of the cycle low will need a breather before another push higher.
So while I am expecting some type of pullback in the near term, think that this first daily cycle will go on to form in a right translated manner. One reason for this is what I see happening with the Advance Decline line.
While stocks have yet to print a new all time high, the Advance Decline has shot up like a rocket and is at all time highs. So after any breather, I think that stocks will follow.