Miner Breakout

The Miners broke convincingly above the declining trend line on Tuesday.

I received plenty of emails today asking if the Miner’s breakout on Tuesday signals that day 14 hosted an early daily cycle low. The evidence suggest no. The Miner’s first 10 daily cycles since emerging from the bear market bottom back in December, 2015 averaged 23.7 days. The previous 2 daily cycles ran 49 and 39 days respectively. So 14 days historically is just too early for a DCL, so we will label it as a half cycle low. That makes Tuesday day 22 for the daily Miner cycle. A new high on day 22 shifts the odds towards a right translated daily cycle formation.

The second reason for labeling Tuesday as day 22 for the Miners is the status of the daily gold cycle.

Gold is the driver to the precious metals market. Gold only had a mid-cycle consolidation which makes Tuesday clearly day 19. The new high on day 19 shifts the odds towards a right translated cycle formation. Which aligns with where the Miners are in their daily cycle.

The Miners delivered a large Selling on Strength number on Tuesday. Often times these large Selling on Strength numbers appear at or near cycle tops. Which is another reason that supports a day 22 labeling for the Miners.

In Wednesday’s Mid-Week Report I plan to discuss where this places gold and the Miners in their intermediate cycle and tie that in with what the dollar is doing.

The 6/02/17 Morning Update

Gold closed lower on Thursday.

The lower close eases the parameters for forming a swing high. A break below 1262.00 forms a swing high. And then a break below the daily cycle trend line confirms that the daily cycle is in decline.

Gold has yet to print a failed daily cycle during this intermediate rally. Since 2 out of the past 4 daily cycles stretched past 40 days it is still possible for gold to form a left translated daily cycle, even with a new high on day 15.

The Miners are being contained by the declining trend line and they have not followed gold higher. This bearish divergence is a signal of an impending intermediate decline for gold. The Miners have already locked in a left translated daily cycle formation.

Thursday was day 20 for the daily Miner cycle. The Miners need to break below the day 15 low of 22.20 in order to complete their daily cycle decline. And if gold is in the process of forming a failed daily cycle, then the Miners will likely follow. A break below 20.89 will form a failed daily cycle for the Miners.

A rallying dollar will likely send gold into its intermediate cycle decline.

The dollar printed its lowest point on day 38, following the day 10 peak. That places the dollar deep in its timing band for a daily cycle low. The dollar is also in its timing band for forming an intermediate cycle low. The dollar has already formed a daily swing low and a weekly swing low. A break above the declining trend line will confirm a new daily cycle for the dollar.

The catalyst that could set things in motion is Friday’s jobs report.

Bearish Gold Divergence

The dollar printed its lowest point last week on Monday, day 38. Which places the dollar in its timing band for a daily cycle low. The dollar formed a swing low and rallied into Friday which makes it look like day 38 hosted the daily cycle low.

Then the dollar closed lower on Monday.

Even though the dollar closed lower on Monday, it still appears to be rallying out of a daily cycle low. And I think gold’s reaction on Tuesday supports that notion. Lately when the dollar declines, gold has rallied.

In The Weekend Report we discussed the conflicting messages from gold.

The evidence that gold is in a new intermediate cycle:
* A new high on day 14 shifts the odds towards a right translated daily cycle formation.
* Gold is establishing a new daily uptrend.
* Week 21 places gold in its timing band for an intermediate cycle low.
* A weekly swing low has formed.
* Gold has broke above the declining weekly trend line.
* Gold has closed above the 50 week MA.

Reasons that prevents us from labeling May 9th as the ICL.
1) Gold has yet to deliver a failed daily cycle.
2) The dollar is beginning to rally into a new daily cycle.
3) A weekly swing low has formed on the dollar.
4) The Miners have been diverging bearishly from gold.

So instead of rallying on a day where the dollar closed lower, gold also closed lower — perhaps sensing the dollar has formed a daily cycle low. A close below 1261.80 will form a swing high on gold. Then a close below the 200 day MA will confirm that gold’s daily cycle is in decline. Since the previous 4 daily cycles for gold stretched between 28 days and 48 days, a peak on day 14 could still result in a left translated cycle formation.

Miner Top

The dollar came close to forming a daily swing low on Tuesday.

Monday was the lowest point following the day 10 peak. At 38 days that places the dollar deep in its timing band for a daily cycle low. A break above 97.33 will form a swing low to signal a new daily cycle. And if the dollar is beginning a new daily cycle it may also be beginning a new intermediate cycle as well.

The is week 16 for the intermediate dollar cycle. The dollar printed a lower weekly low on Monday. Tuesday’s rally is causing the dollar to form a weekly bullish reversal, which will ease the parameters for forming a weekly swing low to signal a new intermediate cycle. And if the dollar is beginning a new intermediate cycle, then the first daily cycle should form as a right translated cycle rallying for 3 – 5 weeks or more. Which should send the Miners lower.

The 200 day MA stopped the previous 2 daily Miner cycles and appears to have done so again. The Miners broke lower on Tuesday, dropping over 2.3%. That caused the Miners to close below both the 50 day MA and the 10 day MA to signal that the Miners have begun their daily cycle decline. Tuesday was day 13 for the daily Miner cycle. The Miners daily cycle have been averaging 23 days over the past 12 daily cycles which makes it likely to see the Miners trend lower for the next 2 weeks and up to 3 to 5 more weeks if the dollar is beginning a new intermediate cycle. And a break below the previous daily cycle low of 20.89 will form another failed daily cycle

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Miner Top

The Miners rallied out of the early March low but were halted by the 50 day MA on 3/17.

The Miners preceded to consolidate below the 50 day MA and began to be squeezed by the convergence of the 50 day MA and the rising 10 day MA.

That convergence was resolved on Tuesday.

The Miners established a daily downtrend by closing below the lower daily cycle band as the declined into the early March DCL. Since they failed to close above the upper daily cycle band during this past leg up, they remain in a daily downtrend. With the Miners approaching their timing band for the daily cycle low, Tuesday’s close below the 10 day MA signals the start of their daily cycle decline.

And part of what is driving the Miners lower is the dollar.

The dollar printed its lowest point on Monday, following the day 19 peak. Day 36 places the dollar well within its timing band to print a DCL. Tuesday’s swing low very likely means that Monday hosted the DCL. And as the dollar rallies out of its DCL that will help to push the Miners lower.

Miner Conundrum

The Miners printed their lowest point on Thursday after peaking back in February. While the daily cycle count for Miners has become obscured, either count places Thursday in the timing band or very late in the timing band for a daily cycle low.

The Miners did form a swing low on Friday. Our preferred tool for confirming a new daily cycle is a trend line break. But with the declining trend line over 14% above price we then look for a close above the 10 day MA, which marginally occurred on Monday. Had the rally out of Thursday’s low been more robust then I would be inclined to label it as a DCL. I suspect that the Miners will print one more lower low in order to form its impending daily cycle low.

And we have the dollar rallying out of a low to thank for this Miner conundrum.

The dollar’s daily cycle peaked on day 19 and then began its daily cycle decline. The dollar found support at the 50 day MA and printed a swing low on Tuesday. Monday was day 26, placing the dollar in its timing band for a daily cycle low. A close above the declining trend line will confirm Monday as the DCL.

Miner Divergence

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.

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 …

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.

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

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

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

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

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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Risk/Reward

The Miners closed below the lower daily cycle band for the second straight day. There is a risk that the Miners are beginning a daily downtrend.

The Miners printed a narrow range lower low on Tuesday. At 22 days, that places the Miners in their timing band for a daily cycle low. So a swing low could signal a new daily cycle. A break above 23.42 will form a daily swing low.

By breaking below the day 24 low, there is a risk that the Miners printed a failed daily cycle and is beginning a decline into an intermediate cycle low. And based on the weekly cycle count, a decline into an intermediate cycle low from this point could last up to 14 or more weeks.

But there is the potential for a reward here. Since the narrow range day has eased the parameters for forming a daily swing low, a long position can be entered with a stop below Tuesday’s low, therefore minimizing risk.

The potential for reward rests with the possibility that day 24 was not the daily cycle low which would make Tuesday day 46. That would make this a right translated daily cycle, We would therefore have the expectation to see the Miners print a higher daily cycle high.

Miner Concerns

In bullish markets surprises come to the bull side.
In bear markets surprises come to the bear side.

I think that the Miners are in a bull market, but there is no denying that the Miners delivered a bearish surprise on Monday.

The Miners printed a swing low on Thursday off of Wednesday’s bearish reversal. But as we discussed in the Weekend Report, the Miners needed to break above the declining trend line in order to confirm the new daily cycle. Instead the Miners broke below the previous daily cycle low to form a failed daily cycle. And a failed daily cycle indicates that the longer term intermediate cycle is rolling over.

I have received some emails asking if instead of Monday being day 21 of the second daily cycle, is it rather day 45 of an extended daily cycle?

Two of our tools (timing band and cycle bands) indicate that day 24 hosted a daily cycle low. So let’s set those two tools aside to consider that Monday was day 45 of a stretched daily cycle. There would still be a concern over this bearish surprise because the 5.35% drop has caused the Miners to close convincingly below the lower daily cycle band to indicate that the intermediate cycle is rolling over.

A possible trigger to the intermediate Miner cycle rolling over would be if the dollar is preparing to form a right translated daily cycle.

As we discussed on Sunday, Day 9 remains as the daily cycle peak for the dollar, 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. But once again, after breaking below the daily cycle trend line the dollar recovered and closed higher. 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 & the Miners lower.