Dollar Delivers Bullish Surprise

The dollar delivered a bullish surprise on Wednesday and bullish follow through on Thursday.

Prior to Wednesday the dollar had been in a daily downtrend characterized by highs forming below the upper daily cycle band and lows forming below the lower daily cycle band. The dollar delivered a bullish surprise on Wednesday by closing convincingly above the 50 day MA and the upper daily cycle band. Closing above the upper daily cycle band ends the daily downtrend and begins a new daily uptrend. Then the dollar delivered bullish follow through on Thursday by closing convincingly above the 200 day MA. This breaks the patters of lower highs and beings a pattern of higher highs.

Wednesday was only day 16 for the daily cycle. Which is still early enough in the daily cycle for the dollar to continue higher. However, the dollar became rather stretched above the 10 day MA and the 50 day MA over the past two days and may need to consolidate to allow the 10 day MA to catch up to price.

 Bullish surprises tend to happen during an intermediate cycle advance. All of this bullish action of the dollar confirms that the late May DCL was also the intermediate cycle low, which places the dollar on week 3 of the new intermediate cycle. In the Weekend Report I plan to discuss what I will need to see to convince me if the dollar has also begun a new 3 year cycle

Bullish Recovery

The Miners closed above After the 200 day MA last Tuesday . They lost the 200 day MA on Thursday and then closed lower again on Friday.

The Miners did get a bit stretched above the 10 day MA as they rallied out of the day 17 DCL. The decline on Thursday and Friday allowed the 10 day MA to catch up to price.  Then the Miners delivered a bullish surprise on Monday by rallying 3.37% to form a swing low and recover the 200 day MA.   

The Miners formed a weekly swing low last week to signal a new intermediate cycle.  Monday’s bullish recovery of the 200 day MA is more evidence that not only are the Miners in a new daily cycle, but beginning a new intermediate cycle as well.   This is something that I plan to discuss further in the Weekend Report

Stocks Form A Daily Swing High

Stocks formed a daily swing high on Wednesday.

Stocks peaked on Monday, day 12. They closed lower on Tuesday and once again on Wednesday, forming a daily swing high.  Stocks did get stretched above the 10 day MA and this may simply be stocks declining into a half cycle low which will allow for the 10 day MA to catch up to price.  But there could be another explanation.

Stocks have been forming this megaphone topping pattern.  Resistance from the upper stem could be sending stocks lower.   A possible strategy is to exit based on the swing high. If this turns out to be a half cycle decline and then one could reenter on a swing low.  This would protect any gains from a deeper sell off.  But if stocks deliver a bullish surprise and close above the upper stem, then long positions can be reentered using the upper stem as the stop. 

Miner Breakout

The Miners broke out above the 200 day MA on Thursday.

Back on Tuesday was noted that the Miners delivered a bullish surprise by forming a swing low. We were looking for a break above the 200 day MA to indicate that the 3/16 low was not only a daily cycle low, but an intermediate cycle low as well.

The Miners not only closed above the 200 day MA, but also closed above the upper daily cycle band.

Closing above the upper daily cycle and ends the daily downtrend and begin a daily uptrend. It also is another indication that the intermediate cycle low has been set.

Miner Surprise

The Miners delivered a bullish surprise on Tuesday.

We discussed on Monday that the Miners broke below the lower daily cycle band to signal a continuation of its daily cycle decline. Closing below the lower daily cycle band also delivered the expectation for the Miners to break below the day 20 low in order to complete their daily cycle decline. Instead of breaking lower on Tuesday, the Miners delivered a bullish surprise by closing up 2.21% for the day.

The volatility over the past 2 weeks has obscured our daily cycle count. A break below the day 20 low would have had us label Tuesday as day 29. But Tuesday’s bullish surprise keeps the door open for the daily cycle count to be day 9. And if the daily cycle count is day 9, that would indicate that the Miners have left behind their intermediate cycle low.

The Miners printed their lowest point on week 28, to place them deep in their timing band for an intermediate cycle low. While the Miners formed a weekly swing low, they still need to deliver a clear and convincing break above the declining weekly trend line to signal the new intermediate cycle. A close above the 10 week MA will confirm the intermediate cycle low. The Miners are in a weekly uptrend. Since the weekly swing low formed above the lower weekly cycle band — the Miners remain in their weekly uptrend and triggered a weekly cycle band buy signal. A break above the multi year resistance level indicates a resumption of the bull market.

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1) The Weekend Report, which is posted usually Saturday mornings. It discusses Dollar, Stocks, Gold, Miners, Oil, & Bonds in terms of daily, weekly and yearly cycles – and it includes the Likesmoney Combination Cycle Tracker & Trend Tracker.

2) The Mid-Week Update. Posted on Wednesdays is a review of the charts for the above mentioned asset classes.

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5) Frequent updates of my proprietary FAS Buy/Sell Indicator

The goal of the Weekend Report is to develop an on-going framework of expectations using cycle analysis.

Is Oil Ready To Cross The Line?

Oil ran into resistance at the 200 day MA last week on day 17. Oil then formed a swing high on and lost both the 10 day MA and the 50 day MA on to signal that the daily cycle decline has begun.

Oil printed it s lowest point on Thursday, day 20, which is early for a DCL. Oil should have continued lower for another 2 to 4 weeks before printing its daily cycle low. But oil delivered a bullish surprise on Friday by forming a swing low and recovering the converging 10 day MA and the 50 day MA. Oil then delivered bullish follow through by retesting the 200 day MA again on Monday.

Oil is currently in a daily uptrend. There is a bullish RSI pattern beginning to emerge. And there is a bullish crossover on the TSI. If oil closes above the 200 day MA we will label day 20 as the daily cycle low.

Stocks Deliver Bullish Surprise

The status of the intermediate cycle had us expecting stocks to form a left translated daily cycle in order to usher in the impending intermediate cycle decline.

It looks as if stocks delivered a bullish surprise instead and printed a day 24 – daily cycle low on Thursday.

The daily equity cycle peaked on day 18, formed a swing high, and then closed below both the daily cycle trend line & the 10 day MA confirming the daily cycle decline.

Prior to Thursday, the daily cycle was characterized by frequent SOS days.
I think that the absence of a SOS day on Thursday suggests Fed intervention, but that is my speculation. There was no SOS day on Thursday which I view as a change of character that signals a new daily cycle.

What is certain is that stocks printed a bullish engulfing candle on Thursday that closed above the declining trend line, which eases the parameters for forming a swing low. A break above 2829.91 forms a swing low to signal a new daily cycle.

Some of you make be asking if 24 days is too early to expect a DCL. The timing band for a DCL for stocks runs from day 30 – day 45 so yes a 24 DCL is early, but it can happen. I will remind you that as recent as May stocks printed a 23 day DCL.

The NYSE New Highs, New Lows is something that I like to track DCL’s, ICL’s and YCL’s. ICL’ normally reach the lower black line. DCL’s normally reach the middle blue line. And the current daily cycle decline did satisfy this criteria by reaching the blue line that signals a DCL.

Regardless if this is a half cycle low or a daily cycle low, if a swing low forms that will trigger a Cycle Band Buy Signal because stocks are in a daily uptrend. They will remain in their uptrend until they close below the lower daily cycle band.