An email to blog begins our discussion tonight.
Aaron asked, “LM, any chance that gold ‘s daily cycle peaked on Friday and is only now descending into a dcl?”
As I considered Aaron’s question, I could not dismiss it. So we will now investigate it beginning with our current daily gold chart.
We have gold’s second daily cycle peaking on day 18 and having a brief decline into a day 20 low. A February 28th daily cycle low label would bring Tuesday to day 12. One of my concerns that TSI normally crosses below the zero line en route to a daily cycle low. And that did not happen here.
So now let’s consider that gold’s second daily cycle low is still in front of us.
Day 18 is no longer the daily cycle peak. But it does begin an 8 day consolidation until gold tags the daily cycle trend line. Then we see gold accelerate into a day 31 daily cycle peak. The swing high formed on Tuesday tags the daily cycle trend line. A break of this trend line will confirm a daily cycle decline. And will also likely deliver a bearish TSI zero line crossover.
So if this extended daily cycle scenario is valid then we should see a brief decline that does break below the daily cycle trend line. Then a quick bullish reversal that leads to gold breaking out to new highs.
Now let’s expand this scenario to the other precious metals.
Silver’s daily cycle peaked on day 16 and the lowest point since printed on day 26. Now one more push lower will eclipse the day 26 low extending silvers daily cycle out to day 33.
And both platinum and palladium daily cycle peaked, then broke the daily cycle trend line confirming a daily cycle decline. And today both found their lowest points following their daily cycle peaks.
So after a review of the other precious metals I feel it is prudent to add the extended daily cycle scenario to our framework. A brief decline and a recover to new highs will confirm this as the valid scenario.
Meanwhile stocks rallied again today further supporting a shortened daily cycle low being printed this past Friday.
We acknowledged in last night’s report that historically about 20% of daily equity cycle lows print a shortened low between 24 to 29 days. And actually that rate is at 29% since 2011. The bullish follow through to Monday’s swing low broke above the declining trend line. That signals a new daily cycle. The TSI dutifully crossed below the zero line before delivering a bullish crossover also supports a 26 daily cycle low label. A break to new highs will give us final confirmation of a new daily cycle.