Trend Line Breaks

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The market delivered some trend line breaks on Monday.

Let’s begin with gold.

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The daily gold cycle peaked on day 25. While a daily swing high formed the next day, gold essentially traded sideways until Monday when gold broke below the daily cycle trend line to confirm the daily cycle is in decline. Gold has averaged about 33 days for its last 10 daily cycles. So with Monday being day 30 that places gold right in its timing band to print a daily cycle low. One possible scenario would be for gold to form a daily cycle low at the convergence of the 200 day and 50 day MA.

Bonds have a similar set up.

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The daily bond cycle peaked on day 25 and formed a swing high two days later. Like gold, bonds did not break below the daily cycle trend line to confirm its daily cycle decline until Monday. The last 7 daily cycles have averaged 27 days so with Monday being day 9 that places bonds in their timing band to print a daily cycle low. Once a swing low forms it would have good odds of marking a daily cycle low. Then a break above the declining trend line would confirm the new daily cycle.

So while both gold and bonds broke below their daily cycle trend lines, stocks broke convincingly above its daily cycle trend line.

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Stocks printed an extended 58 day, daily cycle low on March 27th. Emerging from the extended DCL, stocks breached the daily cycle trend line on day 7. However stocks did not deliver a clear and convincing trend line break until Monday. Monday was day 19 for the daily equity cycle. A break above the day 7 high of 2378.36 will shift the odds towards a right translated daily cycle formation. And if a right translated daily cycle forms, then we would need to reevaluate if 3/27 actually hosted an ICL.

The Status of the Daily Gold Cycle

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Gold formed a swing low and closed above the 200 day MA in a clear and convincing manner. I have received some emails asking if gold has begun a new daily cycle.

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Even though gold had formed a daily swing low on Tuesday, it has not delivered a recognizable decline into a daily cycle low. Normally a decline into a DCL should be enough to cause the 10 day MA to dip lower, which has not happened here. So that would make Tuesday day 22 for the daily gold cycle.

Of course the swing low allows long positions to be entered with a stop below Monday’s low. But we need to keep in mind that gold is on day 22 for the daily gold cycle that has been averaging 33 days per cycle since emerging from the 12/15 bear market bottom. Which means that over then next week our cyclical expectation is for gold to begin to seek out its daily cycle low. A swing high accompanied by a break of the daily cycle trend line will confirm that gold has begun its daily cycle decline.

Gold Confirms New Daily Cycle

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Gold printed its lowest point last Friday, day 29, following the day 20 peak. While gold formed a swing low on Monday, it did not confirm a new daily cycle until Thursday.

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Gold did break higher on Wednesday, gaining over 2% and breaching the declining trend line. Gold delivered bullish follow through on Thursday by breaking higher to close above both the declining trend line and the 50 day MA to confirm the new daily cycle.

Gold began to close below the lower daily cycle band as it was seeking out its daily cycle low. That ended the daily uptrend and began a daily downtrend. Thursday’s rally fell short of breaking above the upper daily cycle band. If gold is turned lower here and closes back below the lower daily cycle band then gold will have established a daily downtrend. But a close above the upper daily cycle band would end the daily downtrend and signal that gold is re-establishing its daily uptrend.

Gold Facing Strong Headwinds

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The dollar printed a bullish reversal off of the support of the 50 day MA on Monday.

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Monday was day 26 for the dollar’s daily cycle. That places the dollar in its timing band for a daily cycle low. Monday’s bullish reversal eases the parameters for forming a daily swing low. A break above 101.25 will form a swing low. Then a break above the declining trend line will confirm the new daily cycle.

The dollar has established a daily uptrend. If a swing low forms then the dollar would have managed to avoid closing below the lower daily cycle band during its daily cycle decline. Which means that the dollar would remain in a daily uptrend.

Despite the dollar’s bullish reversal, gold formed a swing low on Monday.

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Gold printed its lowest point on Friday, day 29. That placed gold with in its timing band for its daily cycle low. It is a bullish sign that gold managed to form a swing low as the dollar printed its bullish reversal.

However, gold faces some strong head winds now that a swing low has formed. Gold will need to break above the 50 day MA just to get started. Then break above the declining trend line, which is aligned with the declining 10 day MA, in order to confirm the new daily cycle.

Something that we need to watch is that gold had closed below the lower daily cycle band as it declined into its daily cycle low. That ended gold’s daily uptrend. If gold rallies here and it does not manage to close above the upper daily cycle band before rolling over, then it will establish a daily downtrend.

Miner Divergence

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Gold is in a daily uptrend. The daily uptrend is characterized by peaks occurring above the upper daily cycle band and lows forming above the lower daily cycle band. Gold should remain in a daily uptrend until it closes below the lower daily cycle band.

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The daily gold cycle peaked on February 27th. After tagging the 200 day MA, gold formed a swing high and then closed below the 10 day MA last Wednesday to confirm the daily cycle decline. While gold has declined for 5 sessions, gold remains above the lower daily cycle band therefore maintaining its daily uptrend.

The same cannot be said for the Miners …

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The daily Miner cycle peaked above the 200 MA back on February 8th. The Miners promptly formed a swing high the next day as it lost the 200 day MA and has been in decline since. The Miners closed below the lower daily cycle band on February 27th, ending its daily uptrend. It has since continued to close below the lower daily cycle band, establishing that it is now in a daily downtrend.

The Miners are oversold and late in their timing band to print a daily cycle low. Once a daily cycle low forms if gold breaks higher then the Miners will surely follow. But the bearish Miner divergence from gold may be sniffing out trouble from the dollar.

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The dollar’s daily cycle peaked last Thursday, day 19, which indicates a right translated daily cycle formation. The dollar has formed a daily swing high but still needs to break below the daily cycle trend line in order to complete its daily cycle decline.

So once the dollar breaks below the daily cycle trend line that should ignite precious metals to rally. The dollar’s right translated daily cycle formation has us expecting a brief decline to be followed by a rally into a new, higher high. Once the dollar begins to rally into a new daily cycle, that has the potential to cause the precious metals to form left translated daily cycles and begin their intermediate cycle decline.

The 3/03/17 Weekend Report

There is a lot going on this week.

* Did the dollar begin its daily cycle decline?
* Stocks are getting late in their daily cycle timing band.
* Are the Miners & gold ready to rally?
* Oil confirms its daily cycle decline this week.
* Bonds delivered a bullish print on Friday.

All of which is discussed in the Weekend Report.
This week I have decided to replace the Weekend Report Preview with a one-time posting of the complete Weekend Report.

My goal is to develop an on-going framework of expectations using cycle analysis.

The ideal time to buy is at a cycle low. 
* There are 4 cycle lows that I cover in the Weekend Report:
– The daily cycle low
– The intermediate (weekly) cycle low
– The yearly cycle low
– the multi-year cycle low

This week I am offering a special 6 week trial membership for $15. You will receive 6 weeks of Likesmoney Subscription Service.

The 6 week trial subscription includes:
* The Weekend Report
* The Mid-Week Update
and I also post what I call my Weekend Updates.
The Weekend Updates cover:
* The FAS Buy/Sell Indicator
* NATGAS
* XLE
* Copper
* GYX
* The Bullish Percentage BINGO

On to the Weekend Report

Summary:

Dollar:
The dollar formed a swing high on Friday. The dollar will need to close below both the 10 day MA and the 50 day MA to confirm the daily cycle decline.

Stocks:
Stocks formed a daily swing high on Friday and are due to decline into a daily cycle low.

Gold:
Gold closed convincingly below the daily cycle trend line on Thursday to confirm the daily cycle decline. The peak on day 20 assures us of a right translated daily cycle formation.

Miners:
Friday’s bullish candle eases the parameters for forming a daily swing low.

Oil:
Thursday’s close below the 50 day MA confirmed that oil entered in its daily cycle decline.

Bonds:
Bonds continue in its months long triangle consolidation.

The Dollar
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The dollar closed above the upper daily cycle band on Wednesday, ending the daily downtrend. The new high on day 19 indicates a right translated daily cycle formation and that February hosted an intermediate cycle low.

The dollar formed a swing high on Friday. The dollar will need to close below both the 10 day MA and the 50 day MA to confirm the daily cycle decline.

A right translated daily cycle formation and breaking above the declining weekly trend line indicate that week 24 hosted the intermediate cycle low for the dollar. The dollar is in a weekly uptrend and will remain in its weekly uptrend until it closes below the lower weekly cycle band.

The dollar formed a monthly swing high in February to signal the start of the yearly cycle decline. The dollar has already formed a monthly swing low in March. Since there has been no failed intermediate cycle, that makes March month 10 for the yearly dollar cycle. The dollar will now need to break below the February low of 99.19 in order to complete its yearly cycle decline.

The dollar printed a failed yearly cycle in May to confirm the 3 year cycle decline for the dollar. The dollar has since printed new monthly highs. Since a cycle cannot fail and then print a higher high, this confirms that May was an early 3 year cycle low. That makes March month 10 for the new 3 year cycle.

The dollar cycles through a 15 year super cycle. Each 15 year super cycle is embedded with five 3 year cycles. The dollar’s last 15 year super cycle peaked in 2001 on month 106, then declined into its third 3 year cycle low. There are some similarities developing to the current set up. Currently, the dollar has printed a new high in January, which is month 105 for the 15 year super cycle. Which is about when the previous super cycle rolled over into its 15 year super cycle decline. At the previous super cycle peak the dollar was quite stretched above the 200 month MA as well as the 50 month MA — as it is right now. There are bearish divergences developing on the momentum indicators that also appeared at the previous 15 year super cycle peak.

May hosted the 3 year cycle low, which was a shortened 3 year cycle of only 24 months. Since most times cycle balances themselves out, we could be poised for the next 3 year cycle to be a stretched 3 year cycle just as the dollar is ready to begin its 15 year super cycle decline. And a stretched 3 year dollar cycle decline would align with gold beginning a new multi year bull cycle.

Stocks
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Stocks formed a daily swing high on Friday.

The new high on day 40 locks in a right translated daily cycle formation. The accelerated daily cycle trend line has aligned with the 10 day MA. A close below the 10 day MA will confirm the daily cycle decline. Stocks are in a daily uptrend. Stocks will continue its daily uptrend until it closes below the lower daily cycle band.

Since a failed daily cycle is needed to confirm the intermediate cycle decline, the right translated daily cycle formation makes it likely that stocks will need at least one more daily cycle to decline into an intermediate cycle low. That should take the intermediate cycle out to late April or into May. Stocks continue to close above the upper weekly cycle band remaining in its daily uptrend. Stocks will continue its weekly uptrend until it closes below the lower weekly cycle band.

March is month 13 for the yearly equity cycle. The new high locks in a right translated yearly cycle formation. Stocks are now in their timing band for seeking out their yearly cycle low. A monthly swing high accompanied by a break of the monthly trend line will confirm the yearly cycle decline. Once stocks begin their intermediate cycle decline that should also trigger the yearly cycle decline.

Gold
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Gold closed convincingly below the daily cycle trend line on Thursday to confirm the daily cycle decline. The peak on day 20 assures us of a right translated daily cycle formation.

Friday was day 23, placing gold in the early portion of its timing band to print a daily cycle low. Gold’s daily cycles have averaged 27 days since emerging from its 2015 bear market low. So it is quite likely that gold needs a few more days before printing its daily cycle low. Gold is currently in a daily uptrend. Gold will need to form its daily cycle low above the lower daily cycle band to avoid signaling an end to the daily uptrend. However, a bullish reversal off the rising 50 day MA would still allow gold to maintain a bullish posture.

This was week 11 for the intermediate gold cycle & gold continues to print higher weekly highs. Gold now faces resistance at the 50 week MA as it appears to be declining into a daily cycle low. Once a daily cycle low forms, gold should break through the 50 week MA and challenge the declining (blue) weekly trend line. However a close below the rising 10 week MA would be a clear signal that the intermediate cycle decline has begun.

Gold formed a monthly swing low in January to signal the new yearly cycle and went on to deliver bullish follow through in February. Gold appears is being squeezed by the convergence of the declining 50 week MA and the rising 200 month MA. Resolution of this squeeze play will send gold in a trending move. Gold is in a monthly uptrend. Gold will continue in its monthly uptrend unless it closes below the lower monthly cycle band.

The Miners
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Regardless if Friday is day 49 or day 25, the bullish print has eased the parameters for forming a swing low. A break above 22.47 will signal a new daily cycle.

There are conflicting signals to sort through. The Miners have closed below the lower daily cycle band for 5 consecutive days. Closing below the lower daily cycle band is a reliable indicator that the intermediate cycle is in decline. That aligns with the day 24 low in January marking a daily cycle low which would make Friday day 25 of a failed daily cycle.

Gold, on the other hand, is clearly forming a right translated daily cycle. Since gold is the driver of precious metals, gold’s right translated daily cycle formation aligns with Friday being day 49 of an extended daily cycle for the Miners. Gold has entered its timing band to print a daily cycle low. If gold prints a daily cycle low and begins to rally, the Miners will surely follow. The Miners will need to break above the declining trend line to confirm the new daily cycle.

Friday’s bullish candle sets up the possibility that a daily cycle low has formed. Therefore if a daily swing low forms, then a stop could be placed below the 200 week MA. This is week 10 for the Miners intermediate cycle. The Miners will need to remain above the 200 Week to maintain a bullish posture. If the Miners can form a weekly swing low off of the week 10 candle then we will be able to construct a weekly trend line.

The Miners have been essentially crawling along the 50 month MA since breaking above the 50 month MA in June, 2016. The Miners printed a bullish monthly reversal in December then formed a monthly swing low and breached the declining monthly trend line in January to signal the new yearly cycle. The Miners are in a monthly uptrend. The Miners will continue in their monthly uptrend unless they close below the lower monthly cycle band.

Oil

The day 27 peak assures us of a right translated daily cycle formation. Oil closed below the 50 day MA on Thursday to confirm the daily cycle decline.

Friday was day 35 for the daily oil cycle, which places oil in the early part of its timing band to print a daily cycle low. Oil managed to recover on Friday, regaining the 50 day MA. Since oil needs to break below the rising daily cycle trend line in order to complete its daily cycle decline, Friday’s rally will likely be a counter trend rally. But a break above the declining trend line would force us to recognize that a new daily cycle has begun.

Oil has been coiling above the October pivot for the past 12 weeks. With oil in its daily cycle timing band, a decline into a daily cycle low should cause oil to break below the October pivot and break below the weekly trend line to signal the intermediate cycle decline. Often times the first move out of a coil is a false move. With oil in a weekly uptrend, a potential scenario would be to see a brief intermediate cycle decline that finds support at the rising 50 week MA. Then a break to new highs.

But with the current right translated daily cycle formation, that sets up the possibility that oil will need one more daily cycle in order to complete its intermediate cycle decline.

Oil is in its timing band complete its daily cycle decline. It is also in its timing band to seek out a yearly cycle low. But so far oil has resisted the gravitational pull of these impending cycle lows. So there is the possibility of a brief intermediate cycle decline followed by a breakout to new highs, which would certainly extend the yearly cycle out by another 4 to 6 months. Currently the yearly high printed in month 11. Barring a break to new highs, a monthly swing high and a break below the monthly trend line will confirm that oil has begun its yearly cycle decline. A break below 50.71 will form a monthly swing high.

Bonds

Bonds continue in its months long triangle consolidation.

Bonds did print a bullish reversal on Friday. A swing low here would make Friday a half cycle low. But a close below the rising trend line will have bonds at risk of printing a failed daily cycle.

This was week 11 for the intermediate bond cycle. Bonds need to break above the week 4 high of 122.87 to avoid a left translated weekly cycle formation. However bonds did close below the 10 week MA, which is a signal that the intermediate cycle is rolling over. A clear and convincing close below the rising trend line will confirm the intermediate cycle decline.

Bonds formed a monthly swing low in January and has remained bullish in February. The monthly swing low signals a new yearly cycle. During the yearly cycle decline bonds managed to close above the lower monthly cycle band to remain in their monthly uptrend. They will continue in their monthly uptrend unless they close below the lower monthly cycle band.

As previously stated, bonds formed a monthly swing low to signal a new yearly cycle. Approximately every 32 – 36 months bonds form a 3 year low. The current monthly swing low is in the timing band for a 3 year cycle low. So confirmation of the new yearly cycle will also signal that bonds are in a new 3 year cycle. So far bonds have not gained much traction as it tries to rally out of the 3 year low. This is beginning to appear similar to the 2014 three year low where bonds consolidated for 6 months before getting traction.

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Follow Through

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The dollar broke out to a new daily cycle high on Wednesday and then delivered bullish follow through on Thursday.

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The bullish follow through on Thursday caused the dollar to close above the upper daily cycle band for the second straight day to establish a new daily uptrend. Closing above the upper daily cycle band also signals that the dollar left behind an intermediate cycle low in February.

Gold also delivered some follow through on Thursday.

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The daily gold cycle peaked on day 19. Gold broke breached the daily cycle trend line on Wednesday signaling that gold had begun the daily cycle decline. Gold delivered bearish follow through on Thursday by closing below the daily cycle trend line in a clear and convincing manner to confirm the daily cycle decline. The peak on day 19 indicates a right translated daily cycle formation. Since emerging from the 2015 yearly cycle low gold has averaged about 27 days per daily cycle. Therefore gold could trend lower for the next 5 or so days before printing a daily cycle low.

Gold Lynch Pin

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Gold has entered a new bull market. But the lynch pin to determining gold’s short term direction rests with the dollar.

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The dollar printed its lowest point on week 24, following the week 20 peak. Week 24 does place the dollar in its timing band to print an intermediate cycle low. The dollar is currently testing the declining weekly trend line. A clear and convincing break above the declining weekly trend line will confirm that week 24 hosted the intermediate cycle low. Whether or not the dollar breaks above the declining weekly trend line will be determined by the translation of the dollar’s daily cycle.

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Day 9 remains as the daily cycle peak, which favors a left translated cycle formation. The dollar needs to break convincingly below the daily cycle trend line to confirm the daily cycle decline. The dollar still is in a daily downtrend. Therefore once the dollar breaks convincingly below the daily cycle trend line that should lead to the dollar breaking below the previous daily cycle low of 99.19 to form another failed daily cycle, which should send gold higher.

However, if the dollar regains the 50 day MA and breaks to new highs, then that will change the translation of the daily cycle to a right translated formation and signal that week 24 hosted the intermediate cycle low. And if the dollar breaks to new highs, that should send gold into its daily cycle decline.

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The new high on day 19 assures us of a right translated daily cycle formation and signals that gold has entered its timing band for a daily cycle decline. A swing high will likely send gold into its daily cycle decline. But, if the dollar continues its daily cycle decline that should provide the fuel to allow gold to break above the 200 day MA.

But if week 24 did host the dollar’s intermediate cycle low, then gold’s 200 day MA will likely act as resistance and send gold into its daily cycle decline. But a week 24 intermediate low for the dollar could still be bullish for gold. The dollar still needs to complete its yearly cycle decline. Therefor it is likely that the dollar’s next daily would form as a left translated, failed daily cycle. A left translated failed dollar daily cycle would help to fuel gold to rally into its intermediate cycle peak.

Schooled

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Last Thursday we discussed how the dollar being rejected by the 50 day MA and also losing the 10 day MA was a textbook set up for a decline into a daily cycle low. Based on how the dollar rallied on Friday and Tuesday, I got schooled.

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Thursday was day 10 for the dollar’s daily cycle. Since it was too early for a daily cycle low we will label it a half cycle low, which makes Tuesday day 12. As long as Day 9 remains as the daily cycle peak then this daily cycle favors a left translated cycle formation. Tuesday saw the dollar close to a new closing high for the current daily cycle. If the dollar breaks to new highs going forward, then that will shift the odds towards a right translated cycle formation. A right translated daily cycle formation would have implications on the intermediate cycle.

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The dollar printed a failed daily cycle during its recent daily cycle low. That confirmed the intermediate cycle decline. The dollar is currently testing the declining weekly trend line. So a break to a new daily cycle high would shift the odds towards a right translated daily cycle formation, which is a signal that a new intermediate cycle has begun. It would also cause a break of the declining weekly trend line, which is another signal that week 24 hosted the intermediate cycle low.

Gold has been holding up well in the face of the rallying dollar.

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Tuesday was day 16 for the daily gold cycle. Despite the dollar closing at a new daily cycle high, gold has not breached its daily cycle trend line. However, if gold does breach the daily cycle trend line that will signal that gold has begun its daily cycle decline. And with the peak being on day 8, a break lower here would lock in a left translated daily cycle formation.

The 02/16/17 Morning Report

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The dollar was rejected by the 50 day MA on Wednesday.

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Wednesday’s bearish reversal eased the parameters for forming a swing high. A swing high has formed overnight. This rejection by the 50 day MA should send the dollar into its daily cycle decline. A peak on day 9 can still result in a left translated failed daily cycle.

And the dollar rolling over has ignited a bullish response from gold.

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Gold has held up well as the dollar rallied out of its daily cycle low. This morning we see that gold has formed a swing low off of Wednesday’s bullish reversal and has delivered a trend line break. That signals that day 13 was a half cycle low. Gold’s daily cycle has been averaging 27 – 33 days since emerging from its multi year low. And now that the dollar appears to be rolling over, gold is poised to run higher.