Equity Sell Signal

Stocks have been in a daily uptrend that has been characterized by peaks above the upper daily cycle band and lows above the lower daily cycle band. While stocks remain in their daily uptrend, they delivered some sell signals on Thursday.

After dipping into a half cycle low last week stocks broke out to a new high on Tuesday and Wednesday. However stocks formed a swing high on Thursday and printed a failed breakout which signals that stocks have begun their daily cycle decline. The divergent TSI along with the bearish TSI crossover are other signals that stocks are beginning their daily cycle decline. A break below the daily cycle trend line will confirm that stocks have begun their daily cycle decline.

Meanwhile the Miners continue to develop bullishly.

After the huge day on Wednesday it is not unexpected to see the Miners give back a little on Thursday. However, the Miners continue to develop bullishly as buyers stepped in once the Miners tagged the 10 day MA. That helps to further confirm that day 26 hosted the DCL. And this has implications on the longer term intermediate cycle which I discussed in Wednesday’s Mid-Week Update.

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Oil Confirms New Daily Cycle

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The daily oil cycle peaked on day 32, formed a swing high, and then began its daily cycle decline. Oil printed it lowest point last Thursday, day 41, placing oil in its timing band for a daily cycle low.

Oil formed a swing low on Friday. Then it closed above the 10 day MA and the declining trend line to confirm that Monday was day 2 for the new daily cycle. Oil also closed above the upper daily cycle band, continuing in its daily uptrend. And the correct strategy in an uptrend is to buy the dip.

However the longer term picture suggests to proceed with caution.

Oil has now entered the 4th daily cycle for the current intermediate cycle. This is week 25, which places oil in its timing band to seek out an intermediate cycle low. So while our expectation would be to see this new daily cycle form as a left translated, failed daily cycle oil could still rally for 2 to 3 weeks and still form as a left translated daily cycle.

The 12/08/17 Weekend Report Preview

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

The dollar rallied this week and printed another higher high on Friday, day 9. Keep in mind that the dollar is in a daily downtrend and a bearish reversal formed on Friday. If a swing high forms off Friday’s candle then that will prevent the dollar from closing above the upper daily cycle band. By not closing above the upper daily cycle band means that the dollar remains its daily downtrend. A break below 93.79 forms a daily swing high. But if the dollar manages to close above the upper daily cycle band then that would signal that the November DCL also marked an early ICL.

Stocks
stocks

Stocks entered this week stretched above the 10 day MA. Stocks retraced to tag the 10 day MA on Wednesday, day 14.

Stocks formed a swing low on Thursday. Therefore we can label Wednesday as the half cycle low. Then stocks delivered bullish follow through on Friday. Stocks are in a daily uptrend. They will remain in their uptrend unless they close below the lower daily cycle band.

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Miner Expectations

0 miner surprise

The dollar formed a swing low on Tuesday.

The dollar printed its lowest point on Monday, breaking below its previous daily cycle low to form a failed daily cycle to confirm that the intermediate cycle is in decline. Monday was day 30, which places the dollar deep in its timing band for a daily cycle low. So Tuesday’s swing low has good odds of marking the daily cycle low. The dollar needs to break above the declining trend line to confirm a day 30 DCL.

So the dollar has begun its intermediate cycle decline. This was week 12 for the dollar’s weekly cycle. That means that the dollar can trend lower for another 6 to 12 weeks before printing its intermediate cycle low. Which is plenty of time for the dollar to print at least one more failed daily cycle.

The Miners responded to the dollar printing a swing low by forming a bearish reversal off the declining 50 day MA.

Tuesday was day 15 for the daily Miner cycle, placing the Miners 3 days shy of its timing band for a daily cycle low. The Miners have been trying to close above the 50 day MA for the last 3 trading sessions. On Tuesday the Miners were rejected by the declining 50 day MA and then went on to close below the 200 day MA. With the dollar apparently beginning a new daily cycle it is quite likely that the Miners have begun their daily cycle decline. A break below 22.92 will form a swing high and then a break of the daily cycle trend line will confirm the daily cycle decline.

The Miners did print a new daily cycle high on Tuesday. A new high on day 15 does begin to shift the odds towards a right translated daily cycle formation. The Miners beginning to form right translated daily cycles would align with the declining into an intermediate cycle low.

The 11/10/17 Weekend Report Preview

The Dollar
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The dollar printed an new high on Tues, day 17, assuring us of a right translated cycle formation.

The dollar formed daily swing high and closed below the 10 day MA on Thursday. The dollar continued lower on Friday to breach the daily cycle trend line and turn the 10 day MA lower which indicates that the dollar is ready to decline into its daily cycle low. Still, the dollar is in a daily uptrend & will continue in its uptrend unless it closes below the lower daily cycle band.

Stocks
stocks

On Thursday we discussed how the bearish divergences on the daily oscillators was calling into question whether day 45 hosted the DCL.

So we specified the criteria that needed to be met to change the label of a day 45 DCL.

Stocks did not deliver the bearish follow through that was necessary to meet the criteria for changing the day 45 RT label. Which makes Friday day 12 for the daily equity cycle.

And the significant Buying on Weakness number supports the day 12 labeling. Stocks continue to close above the upper daily cycle band remaining firmly in a daily uptrend. Stocks will continue in their uptrend unless they close below the lower daily cycle band.

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Looking for Clarity

Stocks formed a swing high on Thursday.

Thursday’s swing high makes it unclear if day 45 hosted a daily cycle low or if this day 56 of an extended daily cycle.

The Russell and the Transports are still seeking their DCLS in their respective extended daily cycles. A case can be made based on the the Russell and Transports that the general market still needs to deliver a clear and convincing decline into a daily cycle low.

However …

The Nasdaq 100 shows that the decline in late October:
* Closed below the 10 day MA
* Closed below the upper daily cycle band
* Turned the 10 day MA lower

All of which makes a strong case that the NDX is now on day 11 of the new daily cycle. So A case can be made that stocks are, like the NDX 100, on day 11 of its new daily cycle.

We need to keep in mind that stocks are in a daily uptrend and will remain in its uptrend until it closes below the lower daily cycle band. So unless stocks deliver a clear and convincing decline into a daily cycle low I believe that we need to proceed with day 45 as being labeled the DCL.

What would change that view would be if RSI breaks below the dashed blue line, stocks close below the upper daily cycle band, and deliver a bearish TSI Zero Line Crossover, then that would indicate that Thurs was day 56 of an extended cycle and that stocks are declining into an extended daily cycle low.

Energy to Confirm New Daily Cycle

Energy emerged from its yearly cycle low and rallied close to 13% before peaking on day 35. Then it formed a swing high and drifted lower until printing its lowest point on Friday. That was day 48 placing energy very late in its timing band for a daily cycle low.

XLE formed a swing low on Monday and managed to close above the 10 day MA to signal a new daily cycle. XLE then delivered more bullish follow through on Tuesday. A break above the declining trend line will confirm the new daily cycle. Since XLE managed to not close below the lower daily cycle band as it formed its DCL it remains in its daily uptrend. XLE will continue in its uptrend until it closes below the lower daily cycle band.

Another Miner Low

0 miner surprise

The Miners formed a swing low on Monday.

The Miners printed their lowest point on Thursday, day 18, placing them in their timing band for a daily cycle low. A break of the declining trend line would signal a new daily cycle. However, with this being only week 16 for the intermediate Miner cycle, the Miners need one more daily cycle to bring them in their timing band for an intermediate cycle low. That sets up an expectation for the new daily cycle to form in a left translated manner. The Miners are in a daily downtrend and will remain in their downtrend unless they close above the upper daily cycle band.

The dollar may be instrumental as to whether or not the Miners break out of their daily downtrend.

Monday was day 12 for the daily dollar cycle. The dollar formed a swing high on Monday but still closed above the upper daily cycle band maintaining its daily uptrend. While it is possible that the dollar has begun its daily cycle decline, I believe that the dollar got a bit too stretched above the 10 day MA. Which would make it likely that the dollar will drift lower into a half cycle low, allowing the Miners to confirm a new daily cycle. Then once the 10 day MA catches up to price, the dollar rallies. Which would send the Miners lower to complete their intermediate cycle decline.

The 10/27/17 Weekend Report Preview

The Dollar
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The new high on Friday, day 10, begins to shift the odds towards a right translated daily cycle formation.

The dollar has become a bit stretched above the 10 day MA. A swing high here would signal a decline into a half cycle low, would allow the 10 day MA to catch up to price. The dollar continues to close above the upper daily cycle band which indicates a daily uptrend. The dollar will remain in its daily uptrend unless it closes below the lower daily cycle band.

Stocks
stocks

Stocks broke out to a new high on Friday to signal a new daily cycle.

We have discussed previously how the previous 2 intermediate cycle lows did not produce a failed daily cycle, providing us evidence of a change in behavior. Now the change has filtered down to the daily cycle as demonstrated by the very mild decline into the daily cycle low. Where usually a daily cycle decline would last 7 – 15 days and retrace 38 to 50%, the currency daily cycle decline lasted only 3 days and only briefly closed below the 10 day MA.

Our timing band tool is still helpful in spotting daily cycle declines. But with stocks being in such a strong daily, weekly and monthly uptrend, the daily cycle declines are becoming mild. So we will need to shift our focus to our cycle band tool. As long as stocks remain in a daily uptrend the correct strategy is to buy the dips. Stocks will remain in their daily uptrend unless they close below the lower daily cycle band.

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

Change of Character – Revisited

We discussed back on 10/01/17 that stocks were beginning to exhibit a change of character. I thought that tonight we would a revisit that discussion.

That last time that stocks printed a failed daily cycle was during the decline into the October, 2016 intermediate cycle low. Following the 10/2016 intermediate low the intermediate cycle timing bands still worked, but two times in a row stocks did not deliver a failed daily cycle during their intermediate cycle decline. I said then that “I believe that this weekly uptrend is becoming so strong that we may not see a failed daily cycle until the weekly uptrend ends.” And that continues to be the case.

But I will point out that both the RUT & the transports delivered failed daily cycles. So I thought that it would be interesting to look at the current daily cycle for all three.

Both the RUT & the transports are in their timing bands for seeking out a daily cycle low. Both have formed swing highs and delivered trend line breaks to confirm their daily cycle declines. But stocks keep drifting higher. Since stocks have already exhibited a change of behavior by not forming a failed daily cycle we need to be prepared for another change of character, a mild daily cycle decline.

I would like to see stocks form a swing high and deliver a break of the daily cycle trend line to confirm the daily cycle decline. However, if both the RUT & the transports form a swing low and close back above their 10 day MA that would signal a new daily cycle. And if stocks only continue to drift sideways we may be forced to recognize any mild dip at that point as the daily cycle low.

So going forward there may be a question if our timing band tool will be effective as stocks continue in their weekly uptrend. But what has been effective is our cycle band tool. Our cycle band tool has been able to identify both the daily and weekly uptrends. As long as any dip forms a swing low above the lower cycle band, then the correct strategy is that the dip should be bought because stocks will continue in their uptrend until they close below the lower daily cycle band.