Oil Delivers A Buy Signal

Oil delivered a buy signal on Thursday.

There is a little uncertainty if day 23 represents an early DCL or was it a half cycle low. However what is certain is that oil had been closing above the upper daily cycle band prior to this dip into the day 23 low. Oil formed a swing low and closed back above the upper daily cycle band on Thursday to indicate that oil remains in it its daily uptrend. And a swing low in a daily uptrend is a buy signal. Oil will remain in its daily uptrend until it closes below the lower daily cycle band.

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A Miner Low

0 miner surprise

The Miners formed a daily swing low on Tuesday.

Tuesday’s swing low formed off of the day 59 low, which places the Miner very deep in their timing band for a daily cycle low. Therefore Tuesday’s swing low has good odds of being the day 1 of the new daily cycle.

There are other indicators that signal Tuesday was day one of the new daily cycle. First off the Miners formed a swing low off of support for the 200 day MA. Another signal is that the Miners closed above the lower daily cycle band. There is also bullish divergences developing on the daily oscillators that we see at cycle lows. Now we need to see a close above the declining 10 day MA to confirm Monday as the daily cycle low.

Assuming that the Miners confirm the new daily cycle, what is happening with the dollar will likely cause headwinds for the Miners.

The dollar has formed a monthly swing low off the month 16 low. That places the dollar deep in its timing band for a yearly cycle low. So the monthly swing low has a good chance of marking the yearly cycle low, meaning that the dollar is beginning a new yearly cycle. And the dollar emerging into a new yearly cycle will likely have a deflationary effect on the Miners.

Oil Confirms Daily Cycle Decline

On Thursday we discussed how the bearish reversal was setting oil up for a decline into its daily cycle low. On Monday oil confirmed that it has begun its daily cycle decline.

Oil formed a swing high on Monday that closed convincingly below the 10 day MA. Oil also pierced the daily cycle trend line. Both of these signals indicate that oil has begun its daily cycle decline. With Monday being only day 21 that will allow enough time for oil to drop further so as to turn the 10 day MA lower.

Oil still managed to close above the upper daily cycle band, indicating that oil is in a daily uptrend. Oil will remain in its daily uptrend unless it closes below the lower daily cycle band.

Change of Character

Stocks printed a new daily cycle high on Friday, which was day 28. That locks in a right translated cycle formation and confirms that 8/21 hosted an intermediate cycle low.

With stocks locking in a right translated daily cycle formation that confirms that week 42 hosted the ICL. Which makes this week 5 for the new intermediate cycle. Stocks continue to close above the upper weekly cycle band indicating a weekly uptrend. They will remain in their uptrend until they close below the lower weekly cycle band.

It is time to recognize a change in character for stocks. Back in March stocks declined into what looked like an intermediate cycle low. Stocks satisfied most of the parameters necessary for an intermediate cycle low aside from forming a failed daily cycle.

Our cycle band tool did correctly point to March hosting an ICL, as well as the recent ICL. We did not label an ICL in March because it did not form a failed daily cycle. But stocks just confirmed an ICL without a failed daily cycle…

I believe that this weekly uptrend is becoming so strong that we may not see a failed daily cycle until the weekly uptrend ends. Based on that I have re-labeled the March low as an intermediate cycle low which makes the recent ICL a 21 week ICL.

The 9/29/17 Weekend Report Preview

The Dollar
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The dollar closed above the declining trend line on Monday to confirm the new daily cycle.

The dollar continued higher, closing above the 50 day MA and the upper daily cycle band on Wednesday. That ends the daily downtrend and signals that day 26 also hosted the intermediate cycle low. The dollar then printed a bearish reversal on Thursday and followed up by forming a daily swing high. A close back below the 50 day MA will signal that the dollar has begun its daily cycle decline.

Stocks
stocks

Stocks made a brief 3 day decline resulting in a close below the 10 day MA on Monday. Monday was only day 24, which is too early for a daily cycle low. And since that decline did not manage to turn the 10 day MA lower, we will label Monday as a half cycle low.

With Monday being the half cycle low, that allows us to construct the daily cycle trend line. Now a swing high and break below the daily cycle trend line will confirm a daily cycle decline. But the new high on Friday locks in a right translated daily cycle formation. Stocks are in a daily uptrend and will remain so until they close below the lower daily cycle band. The strategy in a daily uptrend is to buy the dips.

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Oil Slips

Oil formed a bearish reversal on Thursday.

Thursday was day 19 for the daily oil cycle. The new high on day 19 does begin to shift the odds towards a right translated daily cycle formation. However, the bearish reversal has eased the parameters for forming a daily swing high. A break below 51.22 forms a swing high and then a break below the daily cycle trend line will confirm the daily cycle decline. Oil is in a daily uptrend and will remain so until it closes below the lower daily cycle band. A daily low forming above the lower daily cycle band would be a buy signal.

Bonds Bear Witness to Bearish Cycle

On September 19 we discussed that bonds were beginning to become bearish. On Wednesday, bonds confirmed a bearish cycle.

Bonds printed an extended daily cycle low last Wednesday. Bonds formed a swing low the next day and then closed above the declining 10 day MA on Monday to confirm that day 38 hosted the DCL. Bonds closed lower on Tuesday and then broke below the previous daily cycle low on Wed to form a failed daily cycle. Since Wed was only day 5 bonds could potentially go lower for the next 2 – 4 weeks before printing a daily cycle low.

Bonds have begun to close below the lower daily cycle band to establish a daily downtrend. Bonds will continue in their daily downtrend until they close above the upper daily cycle band.
weekly

Bonds are delivering bearish follow through to last week’s break of the weekly trend line. This confirms that bonds are in an intermediate cycle decline. At 12 weeks bonds could trend lower for another 6 – 8 weeks before printing their ICL

Bullish Backtest

Stocks formed a swing low on Tuesday.

If stocks can deliver some bullish follow through then we will label Monday as a half cycle low.

Monday was day 24 for the daily equity cycle. Stocks backtested the previous intermediate cycle top on Monday. If stocks deliver any bullish follow through that would indicate a successful backtest allowing us to construct the daily cycle trend line. Stocks continue to close above the upper daily cycle band indicating that there are in a daily uptrend. They will remain in their daily uptrend unless they close below the lower daily cycle band.

Smoke ’em if you got ’em

The Miners delivered a swing low on Monday

The Miners printed their lowest point on Thursday, which was day 52. The Miners came close to printing a swing low on Friday, but no cigar. The Miners only had 1 daily cycle longer than 52 days over the past 2 years, which occurred in March at 53 days.

So Monday’s swing low has very good odds of marking the daily cycle low. A close above the 10 day Ma will confirm the new daily cycle.

On Sunday I discussed my reservations of the Miners for this new daily cycle. Having stated that I now want make some observations:

1) A swing low deep in the timing band for a daily cycle low is a buy signal.
2) Since the Miners are in a weekly uptrend, there exists the possibility of a bullish surprise.

Close, But No Cigar

The Miners came close to forming a daily swing low on Friday.

Close, but no cigar …

The Miners rallied on Friday to gain 1.12% on the day. While the Miners failed to form a daily swing low, they did regain the 50 day MA and close above the lower daily cycle band delivering the first signals that day 52 hosted the daily cycle low.

So a swing low has good odds of forming the daily cycle low, which is a buying signal. But there are some signals developing that indicate that the Miners have begun an intermediate cycle decline.

The Miners closed below the lower daily cycle band Thursday and Friday, which signals the start of the intermediate cycle decline. On the weekly chart we can see that the Miners have formed a weekly swing high and delivered a break below the weekly trend line. Both of which indicate that the Miners are in an intermediate cycle decline. And this is before the dollar beings to rally out of its intermediate cycle low.

The dollar printed its lowest point on week 31, placing it deep in its timing band for an ICL. So while a new daily dollar cycle has begun, the dollar still needs to form a weekly swing low and break above the declining weekly trend line to confirm a new intermediate cycle. And if the dollar’s intermediate rally begins to develop some traction, that will surely send the Miners lower.