Market Volatility

Stocks printed their lowest point on Friday, tagging the 200 day MA. Friday was day 29, placing stocks 1 day shy of their timing band for a daily cycle low. Back in February stocks found support at the 200 day MA which marked the DCL. Stocks appear to have found support again on Friday at the 200 day MA and formed a swing low on Monday. The question is does Mondays’ swing low signal a new daily cycle?

Stocks printed big 776 million Selling on Strength on Monday. The large Selling on Strength number makes me think that stocks still need to complete their intermediate cycle decline. That is because generally speaking stocks to not print large Selling on Strength numbers as they emerge from a cycle low.

However, stocks did print 5 large SOS days as it emerged from the February daily cycle low. It turns out that those SOS days were foreshadowing the volatility that the market experienced since the February low. And I think that the 776 million SOS on Monday is sending the same message. I think that intermediate cycle decline is continuing. Therefore stocks will need to break below the February low of 2532.69 in order to complete their intermediate cycle decline.

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The 3/02/18 Weekend Report Preview

The Dollar
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The dollar rallied into Thursday, causing the 10 day MA to turn higher confirming the new daily cycle.

The dollar then ran into resistance at the declining 50 day MA causing the dollar to form a swing high on Friday. The dolar did get a bit stretched above the 10 day MA. If the dollar has begun a new intermediate cycle then the 10 day MA should act as support to launch the dollar above the declining 50 day MA. If the dollar loses the 10 day MA here, that would indicate a continuation of the intermediate cycle decline.

Stocks
stocks

Stocks ended their 3 day skid on Friday.

I believe that 2/09/18 marked not only an daily cycle low, but an intermediate and yearly cycle low. If that is the case then Friday potentially marks the half cycle low. But the huge 1,002.99 Selling on Strength number from Friday indicates more volatility ahead.

Still, there were some bullish developments on Friday.

The Nasdaq closed convincingly above its 50 day MA on Friday. A swing low and close above the 10 day MA here will affirm the daily uptrend. And the Semi’s, which have been leading the market, are even more bullish.

The Semi’s remained above their 50 day MA during last week’s decline. On Friday they closed above both their 10 day MA and their upper daily cycle band to affirm their daily uptrend. They will remain in their daily uptrend until the close below the lower daily cycle band

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The 2/09/18 Weekend Report Preview

The Dollar
$$$

The dollar pierced the declining trend line to confirm that Friday was day 11 of the new daily cycle.

The new high on day 11 begins to shift the odds towards a right translated daily cycle formation which would indicate that an intermediate cycle low has formed. Still, the dollar is in a daily downtrend. If the dollar forms a swing high below the upper daily cycle band it will remain in its d daily downtrend.

Stocks
stocks

Stocks volatility continued into Friday, where stocks broke below the previous daily cycle low to form a failed daily cycle and confirm the intermediate cycle decline.

Friday was day 58 for the daily equity cycle, placing stocks deep in their timing band for a DCL. Friday’s bullish reversal off the 200 day MA eases the parameters for forming a swing low. A break above 2638.67 forms a swing low to signal a new daily cycle. A break above the declining trend line will confirm the new daily cycle. Stocks have established a daily downtrend. They will remain in its downtrend unless they close above the upper daily cycle band.

Stocks did print another large Selling on Strength day on Friday. So even if Friday is the DCL, there will likely be more volatility as stocks emerge from the DCL.

The entire Weekend Report can be found at Likesmoney Subscription Services

The Weekend Report discusses Dollar, Stocks, Gold, Miners, Oil, & 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

Potential Bottom

Stocks dropped over 4% on Monday. Stocks recovered on Tuesday gaining back over 40% of Monday’s drop to form a huge bullish reversal. This sets up a potential bottom.

Tuesday was day 54 for the daily equity cycle. That places stocks late in their timing band for a daily cycle low. Tuesday’s huge bullish reversal eases the parameters for forming a swing low. A break above 2701.04 will form a swing low to signal a new daily cycle. The large Selling on Strength number to printed on Tuesday indicates near term volatility due to still needing to exhaust the selling pressure. We will use a close above the declining 10 day MA as confirmation of the new daily cycle.

Stocks – Warning Signals Indicate To Proceed With Caution

Stocks closed below the 10 day MA on Friday. Friday was day 30, placing stocks in their timing band for a daily cycle low. And for reasons that we discussed here on Tuesday, I do not think that day 30 was the daily cycle low.

And stocks delivered more signals on Thursday of a pending daily cycle decline.

One of the signals delivered on Thursday was the bearish TSI divergence. Despite stocks closing at all-time highs there is a bearish divergence developing on the True Strength Indicator.

Another signal on Thursday was the alarmingly large SOS number. As we discussed on Tuesday, stocks printed a huge 777 million Selling on Strength on Tuesday. While the S.O.S. is not a precision tool, we have now received a second larger Selling on Strength signal on Thursday. Stocks printed a huge 1093 million Selling on Strength number on Thursday. This is the type of number usually associated with an intermediate cycle decline. So stocks have now delivered repeated SOS signals while in the timing band for a cycle decline. This increases the odds of a cycle decline.

I also believe something more sinister than a daily cycle decline is unfolding, which I plan to discuss in the Weekend Report.

Analyzing the Evidence for a Daily Cycle Low

I received a number of emails asking if Friday was a daily cycle low.
Let’s look at the evidence.

Generally speaking stocks need to be in their timing band for a DCL and also close below the 10 day MA for a DCL to print.

The daily equity cycle peaked on day 22 and has drifted lower, printing its lowest point on Friday. That was day 30 which places stocks in the early part of its timing band for a daily cycle low. Stocks also closed below the 10 day MA on Friday as well.

So, some of the evidence is beginning to point to Friday hosting the DCL.

However, some other indicators are signaling that the daily cycle low has yet to form. The first of which is the 10 day MA. While stocks did close below the 10 day MA, we also usually see the 10 day MA turn lower prior to a DCL. Which has not yet occurred.

There are usually 2 bearish crossovers that also form prior to printing the DCL: a bearish 30 line crossover on RSI 05 along with a TSI bearish zero line crossover.

In the example above, stocks were in a stretched daily cycle where price did close below the 10 day MA twice before printing the daily cycle low on day 60. But both times that stocks closed below the 10 day MA, RSI did not close below the 30 line, the TSI did not deliver a bearish zero line crossover and the 10 day MA did not turn lower — so consequently stocks did not print a DCL in either case.

And since those same criteria have not been satisfied here, this additional evidence is indicating that the DCL has yet to form.

One last signal indicating that the daily cycle low has yet to form was delivered by the Selling on Strength number that printed on Tuesday.

Stocks printed a 777 million Selling on Strength on Tuesday. This is a large number that usually foreshadows the printing of a daily cycle low. I have to say that it would be very rare to see this type of number on day 1 of a new daily cycle.

So after shifting through the evidence, the odds are that the daily cycle low has yet to form.

Evidence of a Daily Cycle Low

Stocks printed their lowest point on Wednesday, following the day 54 peak. At 60 days, that placed stocks in their timing band for a daily cycle low. While stocks did form a swing low on Thursday, the 701 million selling on strength had us skeptical if a daily cycle low formed.

Stocks dropped on Friday to back tested the declining trend line. Stocks recovered on Monday. While they did not close back above the 10 day MA, stocks continue to develop bullishly. They are close to delivering a TSI bullish zero line crossover, which would provide more evidence that day 60 hosted the DCL.

The Advance-Decline did regain its 10 day MA. There is also a bullish divergence developing on the AD Line and they are leading stocks higher.

And the Semi’s have printed a new high. The Semi’s have been leading stocks and now that they have printed a new high, stocks likely to follow.

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.

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.