Uptrends

Tonight I wanted to look at some different stages of uptrends, beginning with stocks.

Even though stocks formed a swing high on Wednesday, they remain firmly in a daily uptrend. This uptrend is characterized by peaks above the upper daily cycle band and troughs above the lower daily cycle band. Stocks will remain in their daily uptrend until they close below the lower daily cycle band.

Gold began to close above the upper daily cycle band before breaking lower last Friday. Gold printed its lowest point on Tuesday, day 21, but did not close below the lower daily cycle band. Now that gold has closed back above the upper daily cycle band on Wednesday, this establishes that gold is in a new daily uptrend. Gold should remain in its daily uptrend until it closes below the lower daily cycle band.

The Miners also began to close above the upper daily cycle band prior to peaking on day 16. Like gold, the Miners did not close below the lower daily cycle band on Tuesday. If he Miners can now close back above the upper daily cycle band it too, will have established a new daily uptrend.

Conversely, the dollar’s decline into the YCL is stretching its daily cycles resulting in a punishing daily downtrend. The downtrend has been characterized by peaks below the upper daily cycle band and troughs below the lower daily cycle band. Even though the dollar has formed a swing low and appears to have begun a new daily cycle, the dollar will remain in its daily downtrend until it can close above the upper daily cycle band.

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.

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Miner Suspicion

On Wednesday the Miners broke bullishly from being squeezed by the 50 DMA & the 10 DMA. The Miners broke above the 10 DMA, 50 DMA & the 200 DMA. They also closed above the upper daily cycle band to signal an end to the daily downtrend.

This breakout reminds me of the June breakout.

June 6th the Miners broke above the 10 DMA, 50 DMA & the 200 DMA. They also closed convincingly above the upper daily cycle band to signal an end to the daily downtrend. But the Miners delivered a bearish signal on June 6th by printing 356 million in SOS. That eventually lead to the Miners dropping over 9% and printing an extended 45 day DCL on 7/10/17.

This makes me suspicious of the current breakout.

Prior to Wednesday there had been 897 million in Selling On Strength. Wednesday the Miners printed another 289 million in SOS. This has me suspicious of a repeat performance.

While the Miners did print a higher low on July 10th, I will need to see a clear and convincing break above the declining trend line to be persuaded that the Miners are in a new daily uptrend.

Miner Warning

In the Weekend Report we discussed how gold formed a weekly swing low signaling a new intermediate cycle.

Part of the rationale that gold did form an intermediate low included gold closing convincingly above both the 50 day MA and the upper daily cycle band. Also gold closing above both the 50 week MA and the 10 week MA supports a new weekly cycle scenario.

However, Monday’s drop in the Miners is a warning signal that the intermediate low for gold is yet to come.

Recently the daily Miner cycles have been stretching 27 – 33 days so a peak on day 10 can surely result in a left translated daily cycle. Monday’s swing high and 1.61% drop signals the daily cycle is beginning its daily cycle decline. A close below the 10 day MA will provide more evidence that the daily cycle decline has begun. Then a close below the lower daily cycle band will indicate that the Miners are continuing their intermediate cycle decline. Last week we discussed how the accumulated 818 million Selling on Strength indicated of a left translated cycle formation. And this aligns with our yearly cycle count for the Miners.

The yearly Miner cycle peaked in February and then printed its lowest point in May, month 5, which is too early for a yearly cycle low. Since cycle low is defined as the lowest point following the cycle peak, then the Miners will need to break below the May low of 20.89 in order to complete its yearly cycle decline.

So if gold loses both the 10 week MA and the 50 week MA then that would indicate that this is week 11 and gold is continuing its intermediate cycle decline.

Miner Update

The Miners broke above the declining trend line on Monday to confirm the new daily cycle.

I have received some emails asking if the Miners have also began a new intermediate cycle. There is no evidence on the daily chart to suggest that the Miners are in a new intermediate cycle. In fact, the Miners are currently in a daily downtrend, which is characterized by lows forming below the lower daily cycle band and highs forming below the upper daily cycle band. The Miners will need to close above the upper daily cycle band to signal a new intermediate cycle.

So while there is no evidence pointing to the Miners being in a new intermediate cycle, there is a weekly swing low that has formed which does open the possibility that the intermediate low has printed.

The Miners formed a weekly swing low on Monday. Our weekly cycle count places the Miners on week 11, which is too early for an intermediate cycle low. Only a close above the declining 50 week MA would change that view.

The Selling on Strength numbers also support that the Miners are still seeking out their intermediate cycle low.

Monday was day 5 for the new Miner cycle. Four of the past five days were bullish for the Miners. However, four of the past five days saw the Miners print large Selling on Strength numbers. And these large SOS numbers are the type of numbers associated with an intermediate decline.

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.