A Common Thread

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The 50 day Moving Average is a common thread in tonight’s discussion …
… beginning with the dollar.

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After peaking on 4/13/15 the dollar printed is lowest point a week ago Friday. It closed above the declining trend line last Tuesday to confirm a new daily cycle. Its rate of ascent is consistent with that of a new intermediate cycle. The dollar delivered another signal of a new intermediate cycle today by closing above the 50 day MA in a clear and convincing fashion.

Gold also broke through its 50 day MA today.

gold

The daily gold cycle peaked on day 11. It then formed a swing high and lost the 200 day MA on day 12. Losing the 50 day MA in the same clear and convincing manner that it lost the 200 day Ma makes it quite likely that gold is moving into an intermediate cycle decline.

Stocks tested their 50 day MA today.

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The daily equity broke out to a new high on day 7. Then went on to peak last Wednesday on day 9. Monday saw stocks stocks form a swing high and and break below the daily cycle trend line in a clear and convincing manner, finding support just above the 50 day MA. Now stocks may only be moving down into a half cycle low. However if stocks lose the 50 day MA then that swings the odds of this being not only a daily cycle decline, but the beginning of an intermediate cycle decline.

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A swing low formed off the week 29 candle forcing us in real time to be open to the possibility of a stealth intermediate low being left behind. Confirmation would arrive with a break above the upper weekly trend line. Today’s bearish break of the lower trend line makes it more likely that stocks have finally begun their overdue intermediate cycle decline.

The intermediate cycle peaked last week on week 31. A weekly swing high has begun to form. It is also being accompanied by a breach of the lower intermediate trend line which signals an intermediate cycle decline. With stocks currently on day 12, stocks could trend lower for another 4 to 6 weeks.

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