Miner Breakout

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

gdx

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.

gld

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.

sos

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
stockshttp://postimg.org/image/69wujdu9x/

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

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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.

>http://imageshack.com/a/img912/310/6CuaqB.jpg

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
stockshttp://postimg.org/image/69wujdu9x/

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.

http://imageshack.com/a/img633/7050/yfcbWD.jpg

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.

http://imageshack.com/a/img913/2633/FDy203.jpg

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

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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.

spx

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.

Signals …

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Stocks sold off for the third consecutive day.
And for the third consecutive day stocks delivered a bullish Buying on Weakness signal .

bow

Stocks printed 163 million for Buying on Weakness today. Combine that with the 1.623 billion BOW from the previous two days totals over 1.78 billion Buying on Weakness.

spx

Today was day 20 for the daily equity cycle. Even though stocks have sold off for three straight days, stocks are still above the daily cycle trend line. Last night Bob commented that the BOW numbers can “actually be interpreted as “If even such large buying pressure can’t lift price, then we are REALLY in trouble on the downside” Bob’s comment may prove to be prescient if stocks fail to rally here and break below the daily cycle trend line. Should that happen that would lock in a left translated cycle formation setting up an expectation for a failed daily cycle.

The Miners delivered a bearish Selling on Strength signal today.

sos

The Miners printed 217 for Selling on Strength today.

gdx

The Miners have formed a swing low off the day 25 low. But 7 days later they still have not confirmed a new daily cycle. And the large SOS number suggests that a break lower is still in the cards for the Miners.

Balance of Payment

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In this past weekend’s Weekend Report Preview we observed the large BOW that printed on Friday and also discussed the since the previous cycle peaked in mid-May there has been over 4.3 Billion in Buying on Weakness.

In contrast, stocks did print a large SOS day on Monday. That made me curious. So I decided to compare the recent BOW numbers to the recent Selling on Strength numbers.

sos spx

Since the previous daily cycle peak through Monday there has been a total of 1642 million in Selling on Strength. And since the March daily cycle low a total of over 1888 million Selling on Strength has printed.

bow spx

In contrast, from the previous daily cycle peak in Mid March through last Friday, 6/19, there has been over 4.3 Billion in Buying on Weakness. And since the cycle low in March there has been over 7.66 Billion in Buying on Strength through 6/19.

SOS since May Peak —- BOW since May Peak
1642 million SOS ———–4.3 Billion BOW

SOS since March Cycle Low —- BOW since March Cycle Low
1888 million SOS ————–7.66 Billion.

And since Monday stocks have added another 1.01 Billion BOW bring the total to 8.67 Billion.

From the March cycle low through today the BOW numbers are over four times that of the SOS numbers.

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In the Weekend Report Preview I made available a BOW Special Report. This detailed BOW Special Report is still available through Saturday. This BOW report looks at the BOW numbers for this cycle. It then looks at the history of BOW numbers for intermediate lows dating back to the 2009 Financial Crisis Low. It compares the current numbers to the average BOW numbers for ICL’s and the BOW numbers leading into the 2009 low.

This report is still available as a Father’s Day Special. For $10 you will receive the Special BOW Report and a complimentary 30 membership to the Premium Website.

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Gravitational Pull

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http://postimg.org/image/6lhnmaf43/

The daily equity cycle peaked on day 8. Now at day 27, stocks are three days short of entering their timing band to seek out a daily cycle low. Stocks also lost the 50 day MA today, for the third time this daily cycle. With each passing day it becomes more likely that stocks will succumb to the gravitationally pull of the impending daily cycle low.

spx daily

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This is the second daily cycle for the current intermediate cycle. Typically we see 2 to 3 daily cycles per intermediate cycle, so there is a possibility that this daily cycle will fail, leading to the intermediate cycle decline. And so far it is cooperating by having established a left translated structure by virtue of the day 8 peak. A break below the previous low of 1972.56 forms a failed daily cycle, confirming the intermediate cycle decline.

This daily cycle has also delivered three bearish signals that I have only seen prior to the 2009 financial crisis low. That is 3 Quad SOS days. A Quad SOS day is a day where the Selling on Strength exceeds one billion dollars.

quadhttp://postimg.org/image/jsr6hg2t7/

The three times it happened prior to the Financial Crisis low of 2009 occurred during three successive intermediate cycles. Now it occurred during the same daily cycle.

Here is something else that is interesting. Listed below are the total accumulated Selling on Strength for the three intermediate cycles prior to the March, 2009 low.

SOS 5556 – 8/2007 ICL
SOS 4106 – 1/2008 ICL
SOS 4365 – 7/2008 ICL

The 11 intermediate cycles following March 2009 low, the between 11/08 and 10/2014, had an average total accumulated Selling on Strength for the final daily cycle of 1829.

In comparison the first daily cycle for the current intermediate cycle printed A SOS of 4.858 billion. The total accumulated SOS for this daily cycle is 8.526 billion.

Those are some big numbers and they are suggesting some sinister for stocks.

I posted a Special SOS Report for subscribers on 11/28/14. I am going to re-post the complete SOS Report on the premium blog. For those of you who are interested, you can gain access to the Special SOS Report and the entire Weekend Report through a trial subscription. The Weekend Report discusses Dollar, Stocks, Gold, Miners, The CRB Index, & Bonds in terms of daily, weekly and yearly cycles.
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The 1/23/15 Weekend Report Preview

The Dollar
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The previous week the Swiss unpegs the Franc from the Euro. This week Draghi announces Euro QE. These events have helped to obscure our daily cycle count.

1 $$$ Dailyhttp://postimg.org/image/3krtcd1cj/

One possible scenario is that Friday is simply day 25. The daily cycle is forming in a right translated manner and is deep in its timing band to seek out a daily cycle low. We would expect a brief decline soon then a new cycle that breaks to a new daily cycle high.

A second scenario is that the daily cycle peaked the day after the Swiss unpegs from the Euro. A 2 day decline that only marginally breaches the daily cycle trend line and forms a swing high. The announcement of Euro QE would then be day 1 of a new daily cycle.

We will need to be open to either possibility as we wait for further evidence.

Stocks
stockshttp://postimg.org/image/69wujdu9x/

After peaking on day 8 stocks declined and broke below the 50 day MA, which usually signals a daily cycle decline.

http://imageshack.com/a/img538/8826/fyFbWh.jpg

Stocks regained the 50 day MA and then broke lower, printing a lower low on day 21. Stocks, once again, regained the 50 day MA on Thursday, but then closed lower on Friday. This week also saw a historic Selling on Strength day on Thursday and followed up with a large Buying on Weakness day on Friday, which signals that that bulls are not giving up without a fight.

Still, stocks sport a day 8 peak so this daily cycle still maintains a left translated configuration. This is a bearish setup. Of course a break to a new high negates the day 8 peak and would deliver a very bullish configuration.

Barring a break to a new high, stocks should still decline into a daily cycle low. A daily cycle low is defined as the lowest point following the cycle peak, which is currently day 21. Since day 21 is simply too early for a daily cycle low, stocks would need to break below the day 21 low of 1988.12 to print a daily cycle low.

The entire Weekend Report can be found at Likesmoney Subscription Services

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Super Mario

00http://postimg.org/image/9cs5hl3fb/

ECB President Mario Draghi said the central bank would make monthly bond purchases of as much as $70 billion starting in March, and running through September of next year. Stocks reacted positively.

spxhttp://postimg.org/image/youb2x12j/

Stocks broke above the declining trend line and regained the 50 day MA today. Today was day 24 for the daily equity cycle. Stocks still sport a day 8 peak so this daily cycle still maintains a left translated configuration unless stocks break to a new high.

And in spite of the positive reaction stocks still delivered another major bearish signal.

SOS

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Stocks printed another quad Selling on Strength day. The Selling on Strength for Thursday was 1.511 Billion. However, today was not the only quad SOS day for this daily cycle. Another one printed on December 19th.

I have not ever seen a daily cycle record two quad SOS days. In fact, I have only seen a quad day printed 3 times total. They happened during three different daily cycles that led into the 2009 financial crisis low.

quadhttp://postimg.org/image/u7sfs0ft9/