Miner Concerns

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The daily equity cycle peaked on day 21 and formed a swing high. Stocks closed below the 50 day MA on Thursday, while also breaking below the daily cycle trend line which signals a daily cycle decline.

spx

At day 24, stocks could still see up to 2 to 4 more weeks before printing a cycle low. However, stocks also printed a huge 1.6 Billion Buying on Weakness today. That and what we see developing on the weekly chart supports the notion of a possible early daily cycle low.

spx weekly

The weekly chart shows stocks forming a weekly rising wedge pattern. A clear and convincing break of the lower weekly stem would confirm the intermediate cycle decline. But a new daily cycle beginning here would send stocks back up to test the upper stem. And with the weekly cycle on week 28, we would expect to see stocks rejected by the upper stem and then break below the lower stem as stocks seek out their intermediate cycle low.

The Miners delivered a warning signal by dropping close to 3% today and forming a daily swing high.

(Below is the Weekly Miner Chart)

gdx weekly

The previous intermediate cycle was rejected by the declining 50 week MA. That sent the Miners into an intermediate cycle decline. The concern with the Miners is that the close to 3% drop today has the current weekly candle retreating from the 50 week MA once again. A break below the intermediate trend line would signal an intermediate cycle decline.

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