A Miner Rally

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Last week we discussed how the Miners formed a daily cycle low. We also discussed that the dollar emerging out of a potential yearly cycle low would likely cause a left translated cycle formation. So today I wanted to take a follow up look at the Miners.

The Miners did close above the 50 day MA on Friday and provided more bullish follow through on Tuesday. However the Miners printed 170 million SOS on Friday and 108 million SOS on Monday. Typically these types of Selling on Strength numbers are associated with an intermediate cycle decline.

Tuesday was day 6 for the daily Miner cycle and the Miners printed another higher high. But, Tuesday’s bearish engulfing candle eases the parameters for forming a swing high. Since the Miners are already in a daily downtrend, a swing high here will allow the Miners to remain in their daily downtrend. A break below 23.53 would form a daily swing high. The Miners will continue in their daily downtrend unless they close above the upper daily cycle band.

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Miner Temptation

Thursday was day 47 for the daily Miner cycle. That places the Miners deep in their timing band to form a daily cycle low. Thursday’s bullish print eases the parameters for forming a swing low. With the Miners in a daily uptrend it is very tempting to buy the swing low.

Even though the Miners are late in their timing band for forming a daily cycle low the Miners have not yet broke below the (blue) daily cycle trend line. The Miners should break below the daily cycle trend line in order to complete its daily cycle decline.

The status of the dollar’s cycle also has me skeptical that a daily cycle low has formed.

Thursday was likely day 4 for the dollar’s daily cycle. The dollar still needs to break above the declining trend line to confirm the new daily cycle. And once the new daily cycle is confirmed, that increases the odds that dollar has also begun a new weekly cycle.

The dollar printed its lowest point last week. At 31 weeks the dollar is late in its timing band to form an ICL. A weekly swing low and a break above the declining 10 week MA will confirm the new intermediate cycle. A break above 92.69 will form a weekly swing low. So once the new daily cycle is confirmed, that increases the odds that dollar has also begun a new weekly cycle.

Which would be bearish for precious metals.
Perhaps that is why the Miners prints a large Selling on Strength number on Thursday.

Both the Junior Miners and the Miners printed large Selling on Strength numbers that aligns with a rallying dollar which foreshadows more downside for the Miners.

Almost Time …

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Stocks peaked on day 27 and has been in decline since. With Monday being day 36 for the daily equity cycle that places stocks solidly in their timing band to print a daily cycle low.

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Monday’s bullish reversal eases the parameters for forming a daily swing low. A break above 2430.58 will form a swing low to signal a new daily cycle. However stocks printed 285 million Selling on Strength on Monday.

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It is common enough to see Buying on Weakness days begin to accumulate as stocks near a cycle bottom. What is not common is to see more Selling on Strength days as the cycle bottom nears. So even though stocks printed a bullish reversal on Monday, the Selling on Strength number is a signal that stocks will continue lower and perhaps break below the previous daily cycle low. If that happened that would form a failed daily cycle and would allow stocks to complete their intermediate cycle decline.

Gold also showed up Monday on Selling on Strength.

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Gold printed a bearish reversal on Friday. Although gold did close higher on Monday, gold did manage to form a daily swing high.

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Monday was day 30 for the daily gold cycle. That places gold in its timing band to seek out its daily cycle low. Add to that that gold also managed to form a daily swing high and it is clear that cycle top signals are beginning to add up. A break below the daily cycle trend line should send gold to seek out its daily cycle low. Gold has been closing above the upper daily cycle band indicating that gold is in a daily uptrend. If gold can form its daily swing low without closing below the lower daily cycle band then gold will remain in its daily uptrend and that swing low will represent a buying opportunity.

Miner Warning

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

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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.

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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.

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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

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

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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.

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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.

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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

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

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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.

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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.

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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.

Questions about the Dollar

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The dollar closed above the upper daily cycle band on Tuesday and delivered more bullish follow through on Thursday. This raises the question did day 14 host an early DCL?

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Many times a stretched daily cycle it is followed by a shortened one. So that would mean that the 39 day DCL was followed by a 14 day DCL, balancing out the cycles. Another reason why a day 14 DCL scenario is likely is that the alternative would mean that Thursday was day 34. The dollar’s daily cycle runs about 20 – 25 days, sometimes stretching up to 30 days. There is no precedent for the dollar’s daily cycle to stretch this far and continue to be printing new highs. But regardless of the daily cycle count, the dollar should be ready to roll over into a daily cycle decline.

The dollar has also begun closing above the upper daily cycle band to establish a daily uptrend. And closing above the upper daily cycle band is a signal that the dollar is in a new intermediate cycle. Which begs the question did week 15 host an early intermediate cycle low?

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First of all, I think that it is very unlikely that after beginning its intermediate cycle decline that a countertrend rally can regain a significant moving average like the 50 week MA. But the dollar is currently breaking above the 50 week MA. Secondly, if day 14 did host a DCL then the dollar is in its second daily cycle making higher highs and higher lows.

In the Weekend Report I plan to look closer at the dollar and how all of this affects the dollar’s yearly cycle and 3 year cycle.

Not much to say about gold except that once the dollar forms a swing high, then I expect gold to form its swing low and begin a new daily cycle.

So I want to comment on stocks. I cautioned in the Mid-Week Report that any weakness in stocks leading to a close below the lower daily cycle band could lead to something more sinister than a half cycle low. Stocks managed to print a gain on Thursday, but the 10 day MA has turned lower and there was also a huge Selling on Strength number for the SPY on Thursday. It is this type of huge SOS that is often associated with an intermediate cycle decline.

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The 3/04/16 Weekend Report Preview

The Dollar
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The daily swing high and trend line break signals that the dollar has begun its daily cycle decline.

The peak on day 13 shifts the odds that this daily cycle will form as a right translated daily cycle. If the decline into the daily cycle low does not beak below February’s low of 95.28, then the dollar will have formed a higher low, which is another indication that February hosted an intermediate cycle low. A break below 95.28 will continue the intermediate cycle decline.

Stocks
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Stocks closed above the upper daily cycle band on Tuesday. Stocks continued delivering bullish follow through by closing above the upper daily cycle band through Friday, indicating that stocks have begun a new daily uptrend.

Stocks printed a new high on Friday, which was day 14. The large Selling on Strength numbers from Thursday and Friday indicate that we can expect resistance at the 200 day MA.

The entire Weekend Report can be found at Likesmoney Subscription Services

The Weekend Report discusses Dollar, Stocks, Gold, Miners, The CRB Index, & Bonds in terms of daily, weekly and yearly cycles.
Also included in the Weekend Report is the Likesmoney CycleTracker

For subscribers click here.

You can email me at likesmoney@gmail.com to receive a sample copy of the Weekend Report

The 10/02/15 Weekend Report Preview

The Dollar
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The dollar lost the 50 day MA on August 19th as it declined into a failed daily cycle low. The dollar has been contained by the 50 day MA ever since.

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The current daily cycle formed a swing low and regained the 10 day MA on day 1. The dollar continued to be supported by the 10 day MA while experiencing continued resistance at the 50 day MA. The 10 day MA and the 50 day MA converged on Friday resulting with the dollar being squeezed lower and losing both the 50 day and the 10 day MA signaling that the dollar has begun its daily cycle decline.

Stocks
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Stocks closed on Thursday tagging the 10 day MA and printing a huge 734 million Selling on Strength. Since stocks had not yet entered their timing band for a daily cycle low our cyclical expectation was to see stocks continued lower.

And stocks did open lower on Friday.

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Stocks opened on Friday by dropping over 26 handles. It appeared that the gravitational pull of an impending daily cycle low was going to take over and cause stocks to form a failed daily cycle. Then stocks recovered.

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The daily equity cycle peaked on day 17. A swing high formed sending stocks into their daily cycle decline. Stocks printed their lowest point on Tuesday following the day 17 peak. A swing low formed on Wednesday. Stocks continued to recover on Thursday but were halted by the 10 day MA. Friday’s bullish reversal regained the 10 day MA. Stocks also closed above the lower daily cycle band indicating that an early 25 day daily cycle low has been left behind. Friday’s bullish reversal looks like it prevented a failed daily cycle. Now a break of the declining trend line will confirm a new daily cycle.

The entire Weekend Report can be found at Likesmoney Subscription Services

The Weekend Report discusses Dollar, Stocks, Gold, Miners, The CRB Index, & Bonds in terms of daily, weekly and yearly cycles.
Also included in the Weekend Report is the Likesmoney CycleTracker

For subscribers click here.

You can email me at likesmoney@gmail.com to receive a sample copy of the Weekend Report

Signs of Life

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The daily equity cycle peaked on day 17. A swing high formed the next day that closed below the lower daily cycle band sending stocks into their daily cycle decline. Stocks continued lower this week printing their lowest point on Tuesday since the day 17 peak. But then Wednesday and Thursday stocks starting showing some signs of life.

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A swing low formed on Wednesday and stocks closed higher today tagging the 10 day MA. The low on Tuesday, day 25, is a bit too early for a daily cycle low. Quite likely this is a half cycle low. The 734 million Selling on Strength today a aligns with this scenario. Stocks will remain in a daily cycle decline as long as stocks continue to close below the lower daily cycle band. So while stocks showed some signs of life, at day 27 stocks can trend lower for another 2 – 4 weeks before printing their daily cycle low.