Crossing the Line

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Stocks had a big day on Monday, rallying over 2%.

spx

After peaking on day 8, stocks began to head lower, establishing a daily cycle downtrend. Stocks printed their lowest point on Friday, which was day 39, placing stocks in their timing band for a daily cycle low. Stocks formed a swing low and broke above the accelerated (blue) declining trend line to signal Monday as day 1 of the new daily cycle. And the 90% up volume day today is a signal that the intermediate cycle low has been set, as well.

Meanwhile, gold broke lower and is approaching is daily cycle trend line.

GLD

Monday was day 21 for the daily gold cycle. Gold formed a swing high last Thursday. Monday’s bearish follow through saw gold lose the 10 day MA, which is a signal that gold has begun its daily cycle decline. A break below the (blue) daily cycle trend line will confirm the daily cycle gold decline. The peak on day 18 indicates a right translated daily cycle formation. Therefore our cyclical expectation is to see gold print a higher low.

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