Fed To The Rescue

Stocks formed a swing low on Tuesday.

We discussed on Monday why I felt that the Fed could not let the markets develop any bearish follow through to Thursdays’ huge drop. Stocks forming a swing low on Tuesday signals that the Fed has managed to abort (for now) an intermediate cycle decline by forcing stocks to print, what I believe is, an early daily cycle low.

While it is debatable that 21 days is too early for a DCL and should only be a half cycle low. What is not debatable is the quick bullish reversal on RSI that is characteristic of a bullish pattern that occurs during the advancing phase of an intermediate cycle. Which aligns with stocks currently being in a daily uptrend. And since a swing low has formed above the lower daily cycle band, stocks remain in their daily uptrend and trigger a cycle band buy signal.

The 3/19 Evening Report

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Stocks formed a swing low today.

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Wednesday was day 16 for the daily equity cycle.
With 85 billion a month flooding the market, this maybe all we see for a half cycle low.

Equities sold off 25 points over the past three days.
We have seen before during QE fueled rallies that equities tend to have shallow dips of similar magnitude.
We will have to watch if this becomes a pattern.

Wednesday was day 19 for the daily gold cycle.
Gold is in the timing band to seek out a daily cycle low.
If gold was going to print a left translated daily cycle, today would have been the day to lose the 1600 level.

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Instead of rolling over, gold defended the 1600 level.
Gold appears to be gathering itself for one more surge higher.
It looks like gold will break above 1620 and likely test the 50 MA during this daily cycle.

If gold breaks above the 50 MA during this daily cycle that would be a really bullish …

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New Dollar Cycle …

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The dollar broke above the previous daily cycle high confirming Tuesday as day 2 of the new daily cycle.

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Now we turn our attention to see if this daily cycle will form as a left or right translated daily cycle.

I suspect that we will see bonds form as a right translated daily cycle.

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As we discussed last night, it looks as though bonds may have found their yearly cycle low.
Therefore we would expect the first daily cycle to form as a right translated cycle.
Day 7 saw bonds close above the accelerated declining cycle trend line signaling a new daily cycle.
Bonds need to break above the declining blue trend line to confirm a new daily cycle.

With both the dollar and bonds showing strength, stocks sold off for a third straight day.
Stocks tend to seek out their half cycle low around around 15- 20 days
At day 15, the question is if equities are in the process of seeking out a half cycle low or is there something more drastic at hand.

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A break of the weekly cycle trend line would signal that the intermediate cycle is in decline.

You will notice that when the TSI had a bearish crossover in the 50 – 75 level combined with a later weekly cycle count has foreshadowed an intermediate equity decline.

Gold seems to be the beneficiary of the equity weakness of late.

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Day 18 saw gold make progress toward regaining the 1620 level which would lock up a right translated nature to this daily cycle.
It seems with the momentum that gold is picking up a test of the 50 MA may occur prior to the daily cycle peaking.

And a right translated daily cycle is the first signal that a yearly cycle low has printed.

Once we have confirmation of the yearly cycle low in hand, then gold should really start to shine …

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The 3/15/13 Weekend Report Preview

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The Dollar finally formed a swing high on day 30.

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Needless to say, the dollar is very late in the timing band to print a daily cycle low.
The dollar still needs to break below the daily cycle trend line to confirm that the daily cycle is in decline.

With such a late cycle count, I do not expect a lengthy sell off.
The expectation following a right translated daily cycle would be for the next daily cycle to print a higher daily cycle high.

Stocks
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Stocks printed a new daily cycle high at day 13.

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Even though a new high was printed, stocks closed lower on the day.
The dollar rolling over normally gives a lift to equities.

Judging by the strong Buying on Weakness print it seems that stocks will make another push higher before rolling over into a half cycle low.

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Once the dollar rallies out of its impending daily cycle low, that will likely send equities into at least a half cycle low.
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The 2/01/13 Weekend Preview

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The current daily cycle peaked on day 4 and Friday was day 14.
The possibility does exist that the dollar bounces here into a new daily cycle.

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Should that happen, the dollar would need to break above the declining (red) daily cycle trend line to confirm a new daily cycle.
The dollar should be turned back by the declining intermediate cycle trend line and then, I suspect, break below the 79 level.

Part of my rationale that the dollar will be contained by the declining intermediate cycle trend line is based on its intermediate cycle.

I detail the weekly and yearly cycles in the Weekend Report.

Stocks
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Friday saw stocks once again break out to new highs.

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But if the dollar does bounce off the 79 level into a new daily cycle, we could see a mid-cycle pullback here.
A half-cycle low would relieve some of the bullish sentiment that has been building and also set a daily cycle trend line.

I have to say that what we are seeing unfold reminds me for what unfolded last year.

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After the first pull back equities marched relentlessly higher
The dollar seeking out its yearly cycle low combined with QE to infinity should provide a nice tail wind for equities for a final surge into a four year equity cycle peak.

The CCI
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The CCI printed a daily cycle low on Monday and formed a swing low on Tuesday reversing a patterned on lower lows.

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Wednesday was a breakout day where the CCI broke above the declining cycle trend line confirming a new daily cycle.
Friday was day 4 for the new daily cycle.

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The 1/25 Weekend Preview

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If the current daily cycle continues to drop and falls below 79.34 then 1/14 would not mark a DCL.
This would be a stretched cycle in the process of declining into a yearly cycle low.

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Any swing low that breaks above the declining (red) trend line that stays above 79.34 will likely mean that 1/14 was a 16 DCL and the new daily cycle was setting its daily cycle trend line.

If this second scenario plays out then the cycle expectation for this 2nd daily cycle would be to print a higher high above 80.86.

I believe that this second scenario also strengthens the case for a September stealth yearly cycle low.

Stocks
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Equities emerged out for the recent daily cycle low printing gains in 13 out of the previous 18 days closing above 1500 for the first time since 2007.

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Stocks are getting stretched above the 10 day MA and normally seek out a half cycle low in this time frame.
Any swing high swing high could lead to a dip into a half cycle low.

The CCI
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Friday was day 14 for the CCI daily cycle

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Notice how the CCI peaked as it tagged the declining trend line on day 11.
If the CCI did form an intermediate cycle low in late December, then this daily cycle should form as right translated and making a higher low.
Then the task ahead of the CCI would be to form a higher daily cycle high which would break the declining cycle trend line and usher in an inflationary period.

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The yearly cycle sits at 7 months.

I think that the CCI is in the process in forming an early yearly cycle low. The confirmation of a new daily cycle will likely signal a new yearly cycle.

Are the Miners seeking a yearly cycle low? This is covered in the Weekend Report.

The entire Weekend Report can be found at Likesmoney Subscription Services

The Weekend Report discusses Dollar, Stocks, Gold, Miners, The CCI Index, & Bonds in terms of daily, weekly and yearly cycles.
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For the next 7 days I will offer a 1 month trial subscription of the Weekend Report.
$15 for one month allows you access to the entire Likesmoney Weekend Report Suite.

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The 1/18/13 Weekend Preview

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Monday was day 16 for the dollar’s daily cycle.
A swing low formed the next day.
The question is did Monday host a daily cycle low?

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I said that a break above the 80 level does increase the odds of Monday being a daily cycle low and Friday did see the dollar close above the 80 level.
The dollar is has now rallied for 4 days since the day 16 low.
Over the past 3 years, after a daily cycle has peaked no counter trend rally lasted longer than 4 days without initiating a new daily cycle.

Still, we would need to see a break of the declining (red) cycle trend line to confirm a new daily cycle.

A break of the secondary (black) trend line would signal a final drop into a daily cycle low.
Now if Monday did mark a 16 day, daily cycle low, that would lock in a right translated nature to the first daily cycle.

Stocks
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Friday was day 13 for the daily equity cycle.

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At this point, stocks could seek out a half cycle low.
Should the dollar break above the declining cycle trend line, that would likely send stocks into a half cycle low.

It is interesting to note the large Buying on Weakness print by APPL.

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With APPL still a dominant market player, a contra trend trend rally will surely add a tail wind to stocks postponing a drop into a half cycle low.

The CCI
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The intermediate cycle has formed a weekly swing low and is on the verge of breaking through the declining cycle trend line to confirm a new weekly cycle.

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I think that the CCI is in the process in forming an early yearly cycle low. The confirmation of a new intermediate cycle will likely signal a new yearly cycle.

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