Steel is Coiling

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Steel broke above the declining trend line to signal that Monday was day 5 for the new daily cycle. I would like to see a close above the declining 50 day MA to confirm the new daily cycle.

slx daily

Steel printed its lowest point last Tuesday, day 21, which places steel in its timing band for a DCL. If last Tuesday is confirmed as the daily cycle low that will mean that steel printed higher low from the May 18th low. A higher low would indicate that steel has completed the first daily cycle of a new intermediate cycle. We have been unable to confirm a new intermediate cycle because steel has been coiling below the 37.80 level for the past 8 weeks.

slx weekly

Steel appears to have printed a failed intermediate cycle low in May.
Steel printed its lowest point during the second week of May following the week 8 peak. 20 weeks places steel in its timing band for an intermediate cycle low. Steel is also in its timing band for forming a yearly cycle low. Once a new weekly cycle is confirmed it will signal that the new yearly cycle has begun.

Steel has been coiling below the the 37.80 level for the past 8 weeks. A close above the 37.80 level will confirm the new intermediate cycle and signal that steel has begun a new yearly cycle.

Still Seeking a Steel Bottom

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Back in April I began scouting for a yearly cycle low for steel. I admit that I was early. However I kept monitoring SLX and now the indicators are pointing to a possible yearly cycle low for steel.

3 slx yearly

Steel printed its lowest point in May following the month 13 peak. May was month 16 for the yearly steel cycle. Since the previous 5 yearly cycles averaged 10.4 months, 16 months places steel late in its timing band to print a yearly cycle low. So far steel has been rallying in June. A break above the May high of 38.59 forms a monthly swing low to signal a new yearly cycle.

1 slx weekly

The previous 7 intermediate steel cycles have averaged 16.7 weeks. Steel printed its lowest point back in May, at week 20. That places steel deep in in its timing band for an intermediate cycle low. While steel has printed a weekly swing low we can see that steel has been coiling and has yet to deliver confirmation that week 20 hosted the intermediate cycle low.

2 slx daily

Tuesday was day 17 for the daily steel cycle. At this point steel may need to dip down and print one more daily cycle low before breaking through the declining 50 day MA. But once steel closes above the 50 day MA, it will also close above the upper daily cycle band. A close above the upper daily cycle band signals a new intermediate cycle and also that May hosted the yearly cycle low.

Great Expectations

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With the start of a new year I thought that it would be interesting to take a look at some yearly cycles to set some expectations for the coming year.

oil

Oil broke out to a higher monthly high in December, month 10, placing oil in its timing band to seek out a yearly cycle low. A monthly swing high and a break of the monthly trend line will confirm the yearly cycle decline. Therefore we suspect that the intermediate cycle will form as a left translated cycle and fail, leading to the yearly cycle decline. The current daily cycle has a peak on day 19, which begins to shift the likelihood towards a right translated daily cycle formation. So it is likely that oil needs to wait until the next daily cycle before it will begin its yearly cycle decline.

spx

December is month 10 for the yearly equity cycle. A new high on month 10 assures us of 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. The earliest that yearly cycle low will print is with the intermediate cycle low. With the intermediate cycle on week 8, that should stretch the yearly cycle out to months 13 or 14.

steel

Steel has printed a bearish monthly reversal. That has eased the parameters for forming a monthly swing high. It is also in its timing band to seek out a yearly cycle low. A break below 37.78 will form a monthly swing high to signal the start of its yearly cycle decline. It looks like steel will need to print one more failed daily cycle to usher in its yearly cycle low.

gdx

Despite Friday’s bearish close, the Miner’s monthly chart looks bullish. The Miners printed a bullish monthly reversal. December was month 11, placing the Miners in their timing band for a yearly cycle low. The bullish monthly reversal eases the parameters for forming a monthly swing low. A break above 22.24 will form a monthly swing low to signal the new yearly cycle. The Miners are currently below the upper monthly cycle band but above the lower monthly cycle band so they remain in a monthly uptrend. The Miners will continue in their monthly uptrend unless they close below the lower monthly cycle band.

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:
– The daily cycle low
– The intermediate (weekly) cycle low
– The yearly cycle low
– the multi-year cycle low

Perhaps you would like to integrate cycle analysis into your plans for this year.

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