The 8/18/17 Weekend Report Preview

The Dollar
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We would like to see a close above the declining trend line for confirmation that day 50 hosted the DCL but so far the rally out of the day 50 low has been weak.

Friday was day 12 of the new daily cycle. A daily cycle trend line has formed and the dollar has already printed a swing high off the day 10 peak. A break below the daily cycle trend line would signal the daily cycle decline. The dollar is in a punishing daily downtrend. It will continue in its daily downtrend until it can close above the upper daily cycle band.

Stocks
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Stocks formed a lower low on Friday, extending the daily cycle decline.

Friday was day 35 for the daily equity cycle, placing stocks in their timing band to print a daily cycle low. Friday’s narrow range day does ease the parameters for forming a swing low. A break above 2420.69 forms a daily swing low to signal a new daily cycle.

However stocks formed a weekly swing high this week. Stocks maybe pulled lower by the gravitational pull of the impending ICL. A failed daily cycle would confirm the intermediate cycle decline. A break below their previous daily cycle low of 2405.70 will form a failed daily cycle. I discuss this in greater detail in the Weekend Report.

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The Weekend Report discusses Dollar, Stocks, Gold, Miners, Oil, & Bonds in terms of daily, weekly and yearly cycles.
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Possible Daily Cycle Low for Oil

Oil printed a bullish reversal on Tuesday.

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The daily oil cycle peaked on day 27. Oil did not form a daily swing high until Friday, day 35. Oil finally broke below the daily cycle trend line on Monday to confirm the daily cycle decline. Oil printed it lowest point on Tuesday. At 37 days, that places oil well within its timing band for a daily cycle low. Tuesday’s bullish reversal also eases the parameters for forming a swing low. A break above 47.92 forms a swing low. Then a close above the 10 day MA will signal a new daily cycle.

Oil had been closing above the upper daily cycle band prior to entering its daily cycle decline, which indicates that oil is in a daily uptrend. If oil forms a daily cycle low above the lower daily cycle band then oil will remain in its daily uptrend.

Stocks Deliver Bearish Follow Through

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Stocks printed a bearish reversal on Tuesday. On Wednesday stocks formed a swing high which signaled the daily cycle decline. Thursday's bearish follow through indicates something more sinister than a daily cycle decline is afoot.

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Thursday was day 29 for the daily equity cycle. Stocks broke below the 50 day MA to close below the lower daily cycle band which indicates an end to the daily uptrend. It also signals that the intermediate cycle is now in decline. While a peak on day 27 usually results in a right translated cycle formation, stocks closing below the lower daily cycle band calls that in to question. Which means breaking below the previous daily cycle low of 2405.70 is certainly a possibility. If that were to happen that would confirm that stocks are in an intermediate cycle decline.

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The weekly chart shows that stocks are still in a weekly uptrend that is characterized by weekly highs above the upper weekly cycle band and lows forming above the lower weekly cycle band. At 39 weeks stocks are very deep in their timing band to begin an intermediate cycle decline. So while the close below the lower daily cycle band signals that stocks are beginning their intermediate decline, a weekly swing high is required. Since stocks printed a new high this week, the earliest a weekly swing high can form will be next week. But even if stocks form a weekly swing high next week stocks will remain in their weekly uptrend unless they close below the lower weekly cycle band.

Uptrends

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Tonight I wanted to look at some different stages of uptrends, beginning with stocks.

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Even though stocks formed a swing high on Wednesday, they remain firmly in a daily uptrend. This uptrend is characterized by peaks above the upper daily cycle band and troughs above the lower daily cycle band. Stocks will remain in their daily uptrend until they close below the lower daily cycle band.

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Gold began to close above the upper daily cycle band before breaking lower last Friday. Gold printed its lowest point on Tuesday, day 21, but did not close below the lower daily cycle band. Now that gold has closed back above the upper daily cycle band on Wednesday, this establishes that gold is in a new daily uptrend. Gold should remain in its daily uptrend until it closes below the lower daily cycle band.

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The Miners also began to close above the upper daily cycle band prior to peaking on day 16. Like gold, the Miners did not close below the lower daily cycle band on Tuesday. If he Miners can now close back above the upper daily cycle band it too, will have established a new daily uptrend.

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Conversely, the dollar’s decline into the YCL is stretching its daily cycles resulting in a punishing daily downtrend. The downtrend has been characterized by peaks below the upper daily cycle band and troughs below the lower daily cycle band. Even though the dollar has formed a swing low and appears to have begun a new daily cycle, the dollar will remain in its daily downtrend until it can close above the upper daily cycle band.

And I believe that this punishing decline into the YCL is part of a bigger shift on the dollar that I discuss in the Special Report, Death of the Dollar – The Gold Train Update.

In this Special Report, Death of the Dollar – The Gold Train Update. we will take an updated look at the driver of the gold train — the dollar. We will look at were the dollar is in its yearly cycle, 3 year cycle and its 15 year super cycle. We will look at the DNA markers that signaled the previous dollar bear markets and show that those markers have been triggered again.

I would like to make this report available here. The Gold Train Update and a complementary 6 week trial subscription to the Likesmoney Premium Site is available for $15.

The complementary subscription will give you full access to the premium site. It includes:

1) The Weekend Report, which is posted usually Sunday mornings. It discusses Dollar, Stocks, Gold, Miners, Oil, & Bonds in terms of daily, weekly and yearly cycles – Which includes the Likesmoney Cycle Tracker.

2)The Mid-Week Update. Posted on Wednesday’s– This is a review of the daily and weekly charts for the above mentioned asset classes.

3)The Weekend Updates take a look of the daily & weekly charts of GYX, Copper, NATGAS & XLE.

4)Weekly Update of the Bullish Percentile Bingo

5) Frequent (just about daily) updates of my proprietary FAS Buy/Sell Indicator

The goal of the Weekend Report is to develop an on-going framework of expectations using cycle analysis.

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Stocks Form Bearish Reversal

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Stocks printed a bearish reversal on Tuesday.

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Tuesday was day 27 for the daily equity cycle. That places stocks 3 days shy of their timing band to seek out a daily cycle low. Stocks formed a bearish reversal after breaking out to a new high on Tuesday. The bearish reversal eases the parameters for forming a swing high. A break below 2472.99 will form a swing high to signal that stocks have begun their daily cycle decline.

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As we discussed here last week, even if stocks form a daily swing high to begin their daily cycle decline the bigger picture is that stocks are in a daily uptrend. This uptrend is characterized by peaks above the upper daily cycle band and lows forming above the lower daily cycle band. So even is stocks decline into a daily cycle low, they will remain in their daily uptrend until they close below the lower daily cycle band.

Steel Update

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Steel appears to be on the way to confirming a new daily cycle.

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The daily steel cycle peaked last week on day 24. It then formed a swing high and began its daily cycle decline. Steel printed its lowest point on Wednesday, day 28. Steel formed a swing low on Thursday. Steel is delivering a clear and convincing break above the declining trend line on Friday to confirm the new daily cycle. It also appears that steel will close above the upper daily cycle band. Steel is currently in a daily uptrend. It will continue in its daily uptrend until it closes below the lower daily cycle band.

Intermediate Concerns

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Stocks were down close to 23 points early on Thursday before recovering some into the close. In order to consider the bigger implications we will begin with the weekly chart before breaking down the daily chart.

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This is week 38 for the intermediate equity cycle. The new high on week 38 assures us of a right translated weekly cycle formation. Since this is very late for an intermediate cycle decline, I believe that once stocks deliver a correction it will be brief.

And that correction may have began on Thursday …

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Thursday was day 19 for the daily equity cycle. The a new high on day 19 begins to shift the odds towards a right translated cycle formation. However the previous cycle low is less than 3% away. So if this is the start of the daily cycle decline then a failed daily cycle is certainly a possibility. A break below the previous daily cycle low of 2405.70 would form a failed daily cycle and that would confirm that the intermediate cycle is in decline. Of course in order for the daily cycle decline to begin, stocks need to form a daily swing high. A break below Thursday’s low of 2459.93 would form a daily swing high.

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Stocks need to form a weekly swing high in order to begin their intermediate decline. Since stocks printed a new weekly high this week, the earliest a weekly swing high can form would ben next week. Normally intermediate declines run at least 3 to 6 weeks. But as mentioned, since this intermediate cycle is so extended I think that the intermediate decline will be brief. Stocks would need to break below 2405.70 in order to complete their intermediate cycle decline.

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.

Possible Left Translated Bond Cycle

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The intermediate bond cycle peaked on week 15 and then formed a weekly swing high that saw bonds break below the weekly trend line to confirm that bonds began their intermediate cycle decline.

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The rally over the past 2 weeks has been enough for bonds to form a weekly swing low. A weekly swing low could indicate a new intermediate cycle but that would mean that bonds printed a 16 week intermediate cycle. Since the intermediate bond cycle normally runs 18 – 26 weeks, I am suspicious that this 2 week rally in bonds may only be a counter trend rally that will set up the declining weekly trend line.

In order for that to happen then the current daily cycle will need to form as a left translated daily cycle.

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Thursday was day 9 for the daily bond cycle. The new high on day 9 does begin to shift the odds towards a right translated cycle formation. Bonds would need to have to roll over immediately in order to maintain the possibility of a left translated cycle formation.

Bonds did print an exhaustion candle on Thursday. A swing high here would signal that bonds were beginning their daily cycle decline. Bonds did not close above the upper daily cycle band on Thursday. Since bonds began to close below the lower daily cycle band prior to printing the day 19 low means that bonds had begun a daily downtrend. So if bonds were to form a swing high then they will remain in their daily downtrend which would likely result in a left translated cycle formation.

Daily Equity Cycle Update

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Stocks are firmly in a weekly uptrend that is characterized by lows forming above the lower weekly cycle band and highs forming above the upper weekly cycle band. Stocks will remain in their weekly uptrend until they close below the lower weekly cycle band.

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Despite being in a weekly uptrend there are some bearish signals beginning to develop. First, stocks are very deep in their timing band for an intermediate cycle decline. Also there are bearish divergences developing on the weekly oscillators.

And there is a potential bearish set up developing on the daily chart.

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Stocks broke out above the previous daily cycle high on Friday, day 10. However stocks have yet to deliver any kind of bullish follow through. If stocks break below the day 10 high of 2446.69 they will form a daily swing high and a failed break out. Then a close below the 10 day MA would set up a left translated daily cycle formation.