Holding Pattern

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Gold printed an extended, 42 day daily cycle low in early December. Since then gold appears to be in a holding pattern.

gld 1

Following the 42 day DCL gold printed a shortened 10 day daily cycle low on the 17th. (It is not uncommon to see a shortened cycle follow an extended cycle thereby balancing off the cycle counts.) The important takeaway from the 12/17 low is that gold did not print a lower low.

This patterns is similar to what we witnessed in July when gold last printed an intermediate cycle low.

gld 2

After a devastating drop into the July intermediate cycle low, gold consolidated the move lower for almost 3 weeks before finally getting some traction to rally. We may see gold maintain this holding pattern through this 2nd daily cycle. As long as gold remains above the lower trend line, then gold maintains the possibility of leaving behind an intermediate cycle low on 12/03. A break above the upper trend line will then confirm this and also signal that gold left behind a yearly cycle low.

Stocks broke above their declining trend line today.

spx 1

Back on 12/14 when stocks printed their half cycle low, they also broke below the day 34 low signaling a failed daily cycle. Three days later on 12/17 stocks set the declining trend line when they lost both the 50 day MA and the 200 day MA. The expectation was to see stocks continue lower, breaking below the day 19 low of 1993.26, on the way to printing another failed daily cycle.

Instead stocks reversed and rallied and today closed above the upper daily cycle band.

spx 2

A declining trend line break and a close above the upper daily cycle band are clear signals of a new daily cycle. A cycle cannot form a failed daily cycle and then go on, in the same cycle, to print a new higher high. So if stocks break out above 2104.27, then we will need to label 12/14 as an extended 53 day, daily cycle low. Which would make today day 10 of the new daily cycle.

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