Oil Delivers a Bullish Signal

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Oil formed an inside day on Thursday. This is a bullish signal of an impending daily cycle low.

oil daily

Oil printed its lowest point on Wednesday, day 32, which places oil in its timing band to form a daily cycle low. An inside day that forms in the timing band for a daily cycle low has good odds of signaling a new daily cycle. At this point oil needs to form a swing low and break above the declining trend line to confirm a new daily cycle. A break above 44.20 forms a daily swing low.

In the Weekend Report I will discuss that once a daily cycle low forms for oil, that it will likely mark the weekly and yearly cycle lows as well.

Oil Delivers Bearish Surprise

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Oil rallied for over 2 weeks since emerging from the May 5th low. Earlier this week oil began to close above the upper daily cycle band to signal an end to the daily downtrend and that oil may have left behind an intermediate cycle low.

oil daily 2

Oil was getting stretched above the 10 day MA and was due for a cooling off or consolidation. Instead, oil delivered a surprise move lower on Thursday. Generally surprise moves occur in the direction of the trend and Thursday’s 4.79% drop indicates that oil is still in a bearish trend.

Thursday’s move lower eases the parameters for forming a daily swing high. A break below 48.53 forms a daily swing high. If oil forms a daily swing high then it will also threaten closing below the lower daily cycle band. A close below the lower daily cycle band indicates that the intermediate cycle is in decline. You will notice that the previous 2 times that oil closed below the lower daily cycle band that oil ended up forming failed daily cycles.

Oil Daily Cycle Low

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Oil formed a swing low on Monday.

oil

Oil printed its lowest point on Friday, following the day 15 peak. Friday’s bullish reversal eased the parameters for forming a daily swing low. Since 31 days places oil in its timing band for a daily cycle low, the swing low that formed on Monday signals a new daily cycle. A close above the 10 day MA will confirm the new daily cycle.

So while Friday has good odds of marking the daily cycle low, the question is if Friday also marks the intermediate cycle low. The formation of a weekly swing low would signal a new intermediate cycle. A break above 49.32 would form a weekly swing low.

oil yearly

But even if oil forms a weekly swing low, oil has not delivered a failed intermediate cycle. Since oil is in its timing band for a YCL, I would like to see a failed weekly cycle to complete the yearly cycle decline. Therefore oil would need one more failed daily cycle in order to form a failed weekly cycle. If that happens that would extend the yearly cycle decline by another 5 to 7 weeks.

But for now, it does look like a daily cycle low has formed. Next, a break above 49.32 would form a weekly swing low. Then if oil closes above the upper daily cycle band that would swing the odds in favor of this being a new intermediate cycle.

Scouting for a Long Crude Entry

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Oil broke below the previous daily cycle low on Thursday to form a failed daily cycle and to signal a continuation of its yearly cycle decline.

oil yearly

May is month 15 for the yearly oil cycle, which places oil in its timing band for its yearly cycle low. Oil should break below the previous intermediate cycle low in order to complete its yearly cycle decline.

However, oil has not yet produced a failed weekly cycle.

oil weekly

Oil broke below the week 18 on Wednesday to signal a continuation of its weekly cycle decline. With a peak on week 7, oil has locked in a left translated weekly cycle formation. A break below 42.20 forms a failed weekly cycle. Once that happens oil should complete its yearly cycle decline and then we can hunt for a long entry on crude.

Potential Oil Reversal

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Oil printed a bullish reversal on Thursday.

The daily oil cycle peaked on day 15. It printed its lowest point on Thursday, day 25. That places oil in the early part of its timing band for a daily cycle low. A swing low and a close above the declining 10 day MA will signal a new daily cycle.

oil daily 2

Oil’s daily cycle has averaged 38 days since the February, 2016 low. So it is early to be looking for a DCL. But there are a few signals on the daily and weekly charts that point to a possible 25 day, DCL. First off, the aforementioned bullish reversal has eased the parameters for forming a swing low. A break above 49.22 forms a daily swing low to signal a new daily cycle. Also the oscillators are beginning to develop bullish divergences, which often accompany cycle lows.

oil weekly

The 50 week MA has acted as support since oil emerged from from is 3 year cycle low. So there is a possibility that oil is back testing the 50 week MA. A close below the 50 week MA indicates that oil is continuing its yearly cycle decline. But if Thursday’s bullish reversal marked the daily cycle low, that would allow oil to close above the 50 week MA for the week, which would allow us to construct a weekly cycle trend line. Oil is in a weekly uptrend. It will continue in its weekly uptrend until it closes below the lower weekly cycle band.

Oil Bounce or Oil Bull?

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Oil printed its lowest point on week 18, following the week 7 peak. While 18 weeks is a bit early to expect to see an intermediate cycle low, the weekly swing low and bullish follow through indicate otherwise …

oil weekly

Oil consolidated in a narrow trading range over 11 weeks before declining into the week 18 low. Normally a break out of a narrow range yields a trending move. But the move lower was halted by the 50 week MA, which has also stopped the previous 2 intermediate cycle declines. This has me suspicious that the move lower was a fake out move. And now we see that the the weekly TSI has formed a bullish crossover after emerging from a level that has marked the previous yearly cycle low.

oil weekly 2

If oil is still declining into its intermediate cycle low then it should be turned back at the declining weekly trend line. However a bullish break above the declining weekly trend line will signal that week 18 did host an early intermediate cycle low. We also need to recognize that oil established a weekly uptrend by closing above the upper weekly cycle band before it began its intermediate cycle decline. And oil remains in its weekly uptrend since it not close below the lower weekly cycle band as it declined into the week 18 low.

Divergent Energy

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Oil printed its lowest point on day 48, following the day 27 peak, placing oil in the later stage of its daily cycle timing band.

1 oil

Oil closed above the 10 day MA on Wednesday and delivered bullish follow through on Thursday to signal that oil has begun a new daily cycle.

2 oil weekly

Oil has formed a weekly swing low off of support at the 50 week MA. Since oil has formed 2 ICL’s at the support from the 50 week MA it is possible that week 18 hosted an early ICL. But the divergence in the Energy Sector ETF XLE suggests that oil could still print one more failed daily cycle.

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Oil railed for a 1.7% gain on Thursday while XLE close lower. That bearish divergence is a warning signal. So we need to be alert to the possibility that oil will print one more failed daily cycle to complete its intermediate cycle decline. A close below the lower daily cycle band would signal that oil is continuing its 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
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
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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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As of 03/03/17

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Oil Breaks Lower

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Oil peaked last Thursday, day 16 and formed a swing high on Monday. Then oil broke below the daily cycle trend line on Tuesday to confirm that it has begun its daily cycle decline.

oil

A peak on day 16 can still result in a left translated daily cycle formation. A break below 50.71 forms a failed daily cycle and also confirms that the intermediate cycle is in decline. And at this late stage in the yearly cycle, an intermediate cycle decline will likely result in the yearly cycle decline.

Oil Confirms Daily Cycle Decline

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Oil formed a daily swing high and broke below the daily cycle trend line on Monday to confirm its daily cycle decline.

oil daily

Monday was day 37 for the daily oil cycle. That places oil in its timing band for a daily cycle low. The peak on day 33 assures us of a right translated cycle formation. Therefore our cyclical expectation is to see oil print a higher daily cycle low. But our longer term view is more bearish.

oil yearly

January is month 11 for the yearly oil cycle. That places oil in its timing band to seek out a yearly cycle low. A failed daily cycle is necessary to confirm the yearly cycle decline. Therefore we will be watching to see if the next daily cycle forms as left translated failed daily cycle that will usher in the yearly cycle decline.