Open to the Possibilities …


Tuesday was day 6 for the daily equity cycle. Stocks managed to break above the resistance at the 1870 level and now is facing resistance at the 1880 level.

$ SPX Sharp Charts Workbench Stock Charts com 2

The previous daily cycle printed a daily 46 day cycle low on April 11th. Since the previous daily cycle formed in a right translated manner, we expect to see the current daily cycle break out to a new, higher daily cycle high. However, stocks have been known to forgo following a right translated daily cycle with a higher high if the intermediate cycle is in decline. That just may be the case here.

$ SPX weekly

The last yearly cycle low printed in June, 2012. Stocks typically form a left translated, failed weekly cycle that declines into the yearly cycle low, and we are overdue for a yearly cycle decline.

Left translated intermediate cycles usually peak on or before week 8. If stocks go on to print a higher weekly high now, that would dramatically shift the possibility of this weekly cycle from forming in a left translated manner to a right translated manner. However, if stocks cannot print new highs here, then the eight week peak would lock in a left translated nature to the current weekly cycle.

Also please notice the weekly True Strength Indicator. It has been forming a bearish divergence for four plus months. I do not anticipate a bullish breakout to the (blue) trend line until the intermediate cycle low prints, probably in late /June early July.

Another area that we need to be open to the possibilities is the Miners.

GDX Sharp Charts Workbench Stock Charts com 20

Monday saw the Miners form a bullish reversal that broke below the previous daily cycle low and print a failed daily cycle. The intermediate cycle has been in decline since March 14th and and printing a lower low on Monday fulfills its cyclical expectations. Tuesday saw the Miners print a daily swing low. A break above the declining trend line will signal a daily cycle low and possibly an intermediate cycle low.

GDX weekly

This is week 18 for the intermediate Miner cycle. The Miners are in the timing band for printing an intermediate cycle low. Since the Miners printed a lower low this week, the earliest a weekly swing low can form will be next week. A break above the declining weekly trend line will confirm a new intermediate cycle.


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