The 8/11/17 Weekend Report Preview

Stocks
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Stocks printed a narrow range day on Friday.

Friday was day 30 for the daily equity cycle, placing stocks in their timing band for a daily cycle low. A swing low is required to mark the daily cycle low. Stocks did not break lower on Friday as they formed the narrow range day. Stocks need to do one of 2 things to form a swing low. First they could print another narrow range day that is a lower than Thursday’s low of 2437.75. That would ease the parameters for forming a daily swing low. Otherwise stocks will need to break above Thursday’s high of 2465.38 in order to form a swing low.

A peak on day 27 normally assures us of a right translated daily cycle formation. But with the weekly cycle stretched to 40 weeks we cannot rule out the possibility of stocks breaking below the previous daily cycle low of 2405.70 in order to form a failed daily cycle which would allow stocks to complete an intermediate cycle decline.

The Dollar
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The dollar closed above the 10 day MA on 8/04/17 to signal that day 50 hosted a stretched daily cycle low.

The dollar has not yet broke above the declining trend line for final confirmation that day 50 hosted the DCL. So it is unclear if Friday was with day 7 or day 57. But since the dollar closed below the 10 day MA on Friday that indicates a continuation of the intermediate cycle decline. What is clear is that the dollar is in a daily downtrend and is declining into its yearly cycle low. It will remain in its daily downtrend until it can close above the upper daily cycle band.

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And I believe that this punishing decline into the YCL is part of a bigger shift on the dollar that I discuss in the Special Report, Death of the Dollar – The Gold Train Update.

In this Special Report, Death of the Dollar – The Gold Train Update. we will take an updated look at the driver of the gold train — the dollar. We will look at were the dollar is in its yearly cycle, 3 year cycle and its 15 year super cycle. We will look at the DNA markers that signaled the previous dollar bear markets and show that those markers have been triggered again.

I would like to make this report available here through Sunday. The Gold Train Update and a complementary 6 week trial subscription to the Likesmoney Premium Site is available for $15.

The complementary subscription will give you full access to the premium site. It includes:

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

2)The Mid-Week Update. Posted on Wednesday’s– This is a review of the daily and weekly charts for the above mentioned asset classes.

3)The Weekend Updates take a look of the daily & weekly charts of GYX, Copper, NATGAS & XLE.

4)Weekly Update of the Bullish Percentile Bingo

5) Frequent (just about daily) 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.

For the Likesmoney Special Gold Train Update and 6 week trial subscription offer click here.

Current subscribers can access the report here.

Stocks Form Bearish Reversal

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Stocks printed a bearish reversal on Tuesday.

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Tuesday was day 27 for the daily equity cycle. That places stocks 3 days shy of their timing band to seek out a daily cycle low. Stocks formed a bearish reversal after breaking out to a new high on Tuesday. The bearish reversal eases the parameters for forming a swing high. A break below 2472.99 will form a swing high to signal that stocks have begun their daily cycle decline.

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As we discussed here last week, even if stocks form a daily swing high to begin their daily cycle decline the bigger picture is that stocks are in a daily uptrend. This uptrend is characterized by peaks above the upper daily cycle band and lows forming above the lower daily cycle band. So even is stocks decline into a daily cycle low, they will remain in their daily uptrend until they close below the lower daily cycle band.

Bullish Uptrend

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The daily equity cycle has been forming a mini triangle consolidation since peaking last Thursday which was day 19.

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Stocks are currently on day 24 for their daily cycle. That is 6 days shy of the normal timing band for a daily cycle low. Closing below the 10 day MA along with the bearish TSI divergence suggest that stocks are setting up for completing their daily cycle decline.

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So if stock break bearishly to complete their daily cycle decline the bigger picture is that stocks are in a daily uptrend. This uptrend is characterized by peaks above the upper daily cycle band and lows forming above the lower daily cycle band. So even is stocks decline into a daily cycle low, they will remain in their daily uptrend until they close below the lower daily cycle band.

Stocks Deliver a Bearish Signal

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Stocks formed a daily swing high on Tuesday.

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Tuesday was day 22 for the daily equity cycle. Stocks formed a swing high off the day 21 peak. A break below the daily cycle trend line will signal that the daily cycle is in decline.

Usually a peak on day 21, or thereafter, assures us of a right translated daily cycle formation. However, due to the status of the intermediate cycle I believe that the current daily cycle is still at risk of forming as a left translated, failed daily cycle. A break below the previous daily cycle low of 2352.72 forms a failed daily cycle, which confirms that the intermediate cycle is in decline.

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This is week 33 for the intermediate cycle. The weekly cycle is stretched and overdue for an intermediate cycle decline. So confirmation of the daily cycle decline could trigger the intermediate cycle decline as well.

Its About Time …

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Stocks formed a daily swing low on Monday.

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Typically the daily equity cycle runs about 30 – 45 days from trough to trough. However, the previous daily cycle was stretched at 58 days. Since cycles tend to balance a stretched cycle with a shortened cycle, we could see a shortened daily cycle here.

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Even though we are expecting a shortened daily cycle, 13 days would be really short. I would have more confidence of the possibility that Friday hosted an early DCL if stocks broke below the previous daily cycle low of 2333.25 on Friday. The reason is that stocks have been declining into an intermediate cycle low for the past 6 plus weeks. A failed daily cycle normally forms during the intermediate cycle decline. A break below 2322.25 will form a failed daily cycle. However, with stocks being in their timing band for an intermediate cycle low, if stocks deliver a clear and convincing break of the declining trend line then we would be forced to recognize that a new intermediate cycle has begun.

Bonds have entered their timing band to seek out a DCL

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The daily bond cycle peaked on Friday, day 23. A swing high formed on Monday. There is a bearish TSI divergence developing that we often see at cycle tops. A break below the daily cycle trend line will confirm the daily cycle decline.

Bonds have been closing above the upper daily cycle band, establishing a daily uptrend. We will watch for a DCL to form above the lower daily cycle band. If that happens then that will confirm that bonds are in a daily uptrend. They will continue in their daily uptrend until they close below the lower daily cycle band.

A Low is Nigh

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The daily equity cycle peaked on day 40, formed a swing high and began its daily cycle decline. Thursday’s bullish reversal could mark the daily cycle low.

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Thursday was the lowest point following the day 40 peak. At 46 days stocks are deep in their timing band to print a daily cycle low. Thursday’s bullish reversal has eased the parameters for forming a swing low. A break above 2369.08 forms a swing low and has good odds to mark the daily cycle low.

Normally we would like to see break below the daily cycle trend line before looking for a daily cycle low. But this daily cycle is extremely right translated and it does not look like the daily cycle decline will break the daily cycle trend line.

Setting aside the trend line break there are other signals that help to determine a daily cycle low. Timing band is one of the criteria. Seeing the TSI deliver a bearish zero line crossover and the formation a weekly swing are normally present as stocks decline into a daily cycle low.

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And stocks have formed a weekly swing.

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The is week 18 for the intermediate equity cycle. Stocks have entered their timing band to seek out an intermediate cycle low. With a right translated daily cycle formation assured, stocks will need one more daily cycle in order to complete the intermediate cycle decline. Allowing 6 – 8 weeks for the completion of one more daily cycle will take the intermediate cycle deep into its timing band for an intermediate cycle low. Therefore we will watch for signs that the impending new daily cycle will form as a left translated, failed daily cycle.

Stocks Begin Their Daily Cycle Decline

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The daily equity cycle peaked last week on day 26. Stocks formed a swing high the next day but then drifted sideways for the next few days. Thursday’s break below the daily cycle trend line signals that stocks have begun their daily cycle decline.

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A peak on day 26 locks in a right translated daily cycle formation and sets up the expectation for stocks to print a higher daily cycle low. With Thursday being day 33, stocks should print a daily cycle low over the next 5 to 15 days. Stocks continue to close above the upper daily cycle band which indicates that stocks are in a daily uptrend. Stocks will remain in their daily uptrend unless they close below the lower daily cycle band.

Stocks Deliver Bullish Follow Through

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Stocks delivered bullish follow through on Tuesday to confirm that Friday hosted the daily cycle low.

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Tuesday was day 2 for the daily equity cycle and stocks closed solidly above the accelerated declining trend line. Stocks also delivered a bullish zero line crossover on the True Strength Indicator. While not all TSI bullish zero line crossovers mark a daily cycle low, all DCL’s are accompanied by a TSI bullish zero line crossover. If stocks manage to close above the upper daily cycle band that will indicate an end of the daily downtrend.

The Miners remain in a daily downtrend.

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Tuesday was day 20 for the daily Miner cycle. That places the Miners in their timing band for a daily cycle low. A swing low and a close above both the 10 day and 200 day MA would signal that the Miners have printed a daily cycle low. Then a close above the upper daily cycle band would signal an end to the daily downtrend.

Failed Daily Cycle

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Stocks broke below their previous daily cycle low on Thursday, forming a failed daily cycle.

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Thursday was day 23 for the daily equity cycle. That leaves stocks 7 days shy of entering its timing band for a daily cycle low. And now that the technical level of support from the previous daily cycle low was broken, we should see 7 to 10 days of panic selling before stocks print their final daily cycle low.

Instead stocks closed just off their highs for the day forming a bullish reversal. That eases the parameters for forming a daily swing low. Since the last daily cycle was a bit extended at 53 days it is reasonable to see a slightly shortened daily cycle to follow, which would balance out the daily cycle counts. A daily swing low and a break of the declining trend line would be necessary to confirm a new daily cycle.

So if stocks do form an early daily cycle low, let’s look to see what happens to the weekly cycle.

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The intermediate equity cycle peaked on week 7, formed a weekly swing high and then began its weekly cycle decline. A peak on week 7 sets up as a left translated cycle formation. So if a new daily cycle did begin this week it is too early too see an intermediate cycle low form here. So one more daily cycle would be needed to usher in the intermediate cycle decline.

So it makes me wonder if someone saved the markets today …

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Gravitational Pull

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The daily equity cycle peaked on day 8 and has since been finding support along the 2145 level. Stocks broke convincingly below the 2145 level on Tuesday.

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Tuesday was day 21 for the daily equity cycle. Stocks not only broke below the support at the 2145 level but they also closed below the lower daily cycle band. While it is possible that stocks are moving into a half cycle low, often times a close below the lower daily cycle band signals that stocks are feeling the gravitational pull of their impending daily cycle low. With Tuesday being only day 21, that leaves stocks another 9 days before they enter their timing band for their daily cycle low. The peak on day 8 sets this up as a left translated daily cycle formation. A break below the previous daily cycle low of 2119.12 forms a failed daily cycle and confirms that stocks have entered into their intermediate cycle decline.

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The intermediate equity cycle sports a week 7 peak. This is week 15 and stocks have made 7 consecutive lower weekly highs and looks to be printed its 8th straight lower high. So stocks also appear to being pulled into an impending intermediate cycle low as well. The peak on week 7 sets this up as a left translated weekly cycle formation. Since week 11 is the current weekly low, stocks would need to break below the week 11 low in order to complete their intermediate cycle decline.