The dollar is currently on week 25 for its intermediate cycle, which means that the dollar is in its timing band to print a intermediate cycle low.
The hallmark of an intermediate cycle decline is a failed daily cycle. The dollar has yet to form a failed daily cycle so far.
The previous daily cycle peaked on Friday, October 3rd, which was day 8.
A bearish reversal formed on Monday, October 6th which sent the dollar into its daily cycle decline. The dollar then formed a daily cycle low on day 16. But that daily cycle low did not break below the previous daily cycle low, so the dollar did not print a failed daily cycle.
Because the dollar is getting late in its weekly cycle we are expecting the current daily cycle to print a left translated daily cycle and fail. The peak on day 6 aligns with our expectation of a left translated cycle forming. A break of the daily cycle trend line will confirm the daily cycle decline. Then a break below the previous daily cycle low of 84.53 produces a failed daily cycle.
Meanwhile, stocks appeared to have stalled.
Monday was day 8 for the daily equity cycle. Stocks seemed to have stalled and it is beginning to look like stocks are forming a crawl pattern along the 50 day MA. Crawl patterns are typically continuation patterns. And the BOW numbers do suggest stocks will continue higher.
We have been commenting on and off on the Buying on Weakness days that have been adding up. Today added another BOW day. Since the daily equity cycle peaked on 9/19, stocks have printed 4427 billion in Buying on Weakness.
To put that into perspective, stocks printed ‘only’ 1.48 billion BOW going into the August intermediate low.
And the current BOW numbers far exceed the numbers printed during the last yearly cycle decline.
The last yearly cycle decline occurred in June, 2012. The BOW numbers that printed as stocks declined into that yearly low was 1.12 billion. So the BOW numbers since the 9/19 peak has almost quadrupled the numbers for the last yearly cycle low.
So now let’s look at the yearly cycle.
The yearly equity cycle peaked in September, which was month 27. October saw stocks form a monthly swing high and delivered a clear and convincing monthly trend line break to confirm the yearly cycle decline, which passes the ‘look test’.
Stocks have found support at the 20 month MA and now has begun to reverse higher. Besides the decline into the 2009 low, the other 7 yearly lows shown above all tested the 20 month MA before reversing. Since October printed a lower low, the earliest that a monthly swing low can form will be November. With a failed intermediate cycle in hand, stocks has satisfied the criteria for a yearly cycle decline. A monthly swing low and a break to new highs will confirm a new yearly cycle.