Trend Line Breaks

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The market delivered some trend line breaks on Monday.

Let’s begin with gold.

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The daily gold cycle peaked on day 25. While a daily swing high formed the next day, gold essentially traded sideways until Monday when gold broke below the daily cycle trend line to confirm the daily cycle is in decline. Gold has averaged about 33 days for its last 10 daily cycles. So with Monday being day 30 that places gold right in its timing band to print a daily cycle low. One possible scenario would be for gold to form a daily cycle low at the convergence of the 200 day and 50 day MA.

Bonds have a similar set up.

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The daily bond cycle peaked on day 25 and formed a swing high two days later. Like gold, bonds did not break below the daily cycle trend line to confirm its daily cycle decline until Monday. The last 7 daily cycles have averaged 27 days so with Monday being day 9 that places bonds in their timing band to print a daily cycle low. Once a swing low forms it would have good odds of marking a daily cycle low. Then a break above the declining trend line would confirm the new daily cycle.

So while both gold and bonds broke below their daily cycle trend lines, stocks broke convincingly above its daily cycle trend line.

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Stocks printed an extended 58 day, daily cycle low on March 27th. Emerging from the extended DCL, stocks breached the daily cycle trend line on day 7. However stocks did not deliver a clear and convincing trend line break until Monday. Monday was day 19 for the daily equity cycle. A break above the day 7 high of 2378.36 will shift the odds towards a right translated daily cycle formation. And if a right translated daily cycle forms, then we would need to reevaluate if 3/27 actually hosted an ICL.

Steel Bottom

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Steel is beginning to look interesting so I thought that we should take a look.

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Steel formed a daily swing low on Thursday.

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Steel printed its lowest point on Wednesday following the day 5 peak. Wednesday was day 28, placing steel in its timing band to print a daily cycle low. The swing low formed above the support of the 200 day MA. So there are good odds that the day 28 hosted the daily cycle low. A break above the declining accelerated (red dashed) trend line will provide our first confirmation of a new daily cycle. Then a break above the declining (blue) trend line will provide final confirmation that day 28 hosted the DCL.

In my Special Report: Steel Bottom I take a closer look at steel. In my report I break down steel’s daily, weekly and yearly cycles and discuss where steel is in these various cycles. I am offering the Special Report: Steel Bottom along with a 6 week trial subscription to the Weekend Report for $15 which will give you full access to the premium site. It includes:

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Its About Time …

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Stocks formed a daily swing low on Monday.

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Typically the daily equity cycle runs about 30 – 45 days from trough to trough. However, the previous daily cycle was stretched at 58 days. Since cycles tend to balance a stretched cycle with a shortened cycle, we could see a shortened daily cycle here.

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Even though we are expecting a shortened daily cycle, 13 days would be really short. I would have more confidence of the possibility that Friday hosted an early DCL if stocks broke below the previous daily cycle low of 2333.25 on Friday. The reason is that stocks have been declining into an intermediate cycle low for the past 6 plus weeks. A failed daily cycle normally forms during the intermediate cycle decline. A break below 2322.25 will form a failed daily cycle. However, with stocks being in their timing band for an intermediate cycle low, if stocks deliver a clear and convincing break of the declining trend line then we would be forced to recognize that a new intermediate cycle has begun.

Bonds have entered their timing band to seek out a DCL

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The daily bond cycle peaked on Friday, day 23. A swing high formed on Monday. There is a bearish TSI divergence developing that we often see at cycle tops. A break below the daily cycle trend line will confirm the daily cycle decline.

Bonds have been closing above the upper daily cycle band, establishing a daily uptrend. We will watch for a DCL to form above the lower daily cycle band. If that happens then that will confirm that bonds are in a daily uptrend. They will continue in their daily uptrend until they close below the lower daily cycle band.

Looking for Evidence

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Stocks have formed a weekly swing low this week.

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Last week stocks printed their lowest point following the week 17 peak. At 21 weeks, that places stocks in their timing band for an intermediate cycle low. So while a swing low can signal a new intermediate cycle, I do not believe that the evidence supports that week 21 hosted an ICL.

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Stocks broke above the declining trend line on Wednesday to signal that day 58 was a daily cycle low. One of the reasons that I doubt that day 58 hosted an ICL is that the rally so far has been timid. Normally out of an ICL stocks can rally anywhere for 5 – 8% over the first week or so, which has not happened here. Stocks also have formed a bearish TSI zero line crossover. That is a signal that we typically see as stocks start to roll over into a daily cycle decline.

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So I suspect that the weekly swing low that has formed is only setting the declining trend line. Rejection by the declining trend line should send stocks into their final decline into their intermediate cycle low. Stocks would need to break below the week 21 ow of 2322.25 in order to complete their intermediate cycle decline.

The 4/01/17 Weekend Report Preview

The Dollar
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The dollar printed its lowest point on Monday, following the peak on day 19. Wednesday’s close above the declining 10 day MA signaled a new daily cycle.

While the previous daily cycle peaked on day 19 for a right translated cycle formation, it printed a lower high. And Monday’s break below the previous DCL establishes a pattern of lower lows. That signals a continuation of the intermediate cycle decline.

Stocks
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Stocks formed a swing low on Tuesday. A break above the declining trend line will confirm a new daily cycle.

Stocks are beginning their 3rd daily cycle for the current intermediate cycle. And stocks are in their timing band to seek out an intermediate cycle low. A failed daily cycle confirms the intermediate cycle decline. What we need to watch is the translation of the new daily cycle. A left translated cycle formation would signal that stocks are declining into its intermediate cycle low.

Stocks remained above the lower daily cycle band is it declined into the day 58 low. Therefore stocks remain in a daily uptrend and will continue in their daily uptrend until it closes 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

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Divergent Energy

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Oil printed its lowest point on day 48, following the day 27 peak, placing oil in the later stage of its daily cycle timing band.

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Oil closed above the 10 day MA on Wednesday and delivered bullish follow through on Thursday to signal that oil has begun a new daily cycle.

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Oil has formed a weekly swing low off of support at the 50 week MA. Since oil has formed 2 ICL’s at the support from the 50 week MA it is possible that week 18 hosted an early ICL. But the divergence in the Energy Sector ETF XLE suggests that oil could still print one more failed daily cycle.

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Oil railed for a 1.7% gain on Thursday while XLE close lower. That bearish divergence is a warning signal. So we need to be alert to the possibility that oil will print one more failed daily cycle to complete its intermediate cycle decline. A close below the lower daily cycle band would signal that oil is continuing its intermediate cycle decline.

Miner Top

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The Miners rallied out of the early March low but were halted by the 50 day MA on 3/17.

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The Miners preceded to consolidate below the 50 day MA and began to be squeezed by the convergence of the 50 day MA and the rising 10 day MA.

That convergence was resolved on Tuesday.

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The Miners established a daily downtrend by closing below the lower daily cycle band as the declined into the early March DCL. Since they failed to close above the upper daily cycle band during this past leg up, they remain in a daily downtrend. With the Miners approaching their timing band for the daily cycle low, Tuesday’s close below the 10 day MA signals the start of their daily cycle decline.

And part of what is driving the Miners lower is the dollar.

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The dollar printed its lowest point on Monday, following the day 19 peak. Day 36 places the dollar well within its timing band to print a DCL. Tuesday’s swing low very likely means that Monday hosted the DCL. And as the dollar rallies out of its DCL that will help to push the Miners lower.

Possible Turning Points

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The dollar broke below the previous daily cycle low on Monday forming a failed daily cycle.

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Monday was day 36 for the dollar’s daily cycle. That places the dollar late in its timing band to print a daily cycle low. Monday’s bullish reversal has eased the parameters for forming a daily swing low. A break above 99.33 forms a daily swing low which has good odds of marking the DCL. A close back above the declining 10 day MA will confirm the new daily cycle.

Stocks also printed a bullish reversal on Monday.

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Monday was day 58 for the daily equity cycle, which is late in its timing band for stocks to form a daily cycle low. Stocks finally broke the daily cycle trend line, which needed to happen in order for stocks to complete their daily cycle decline. And once again, the bullish reversal has eased the parameters for stocks to form a daily swing low. A break above 2344.90 forms a daily swing low, which should mark the DCL. Then a close back above the declining 10 day MA will confirm the new daily cycle.

And not only are both the dollar and stocks forming daily cycle lows, but I think that we will find that both are also in the process of forming intermediate cycle lows as well. I plan to discuss the weekly cycles for both the dollar and stocks in Wednesday’s Mid-Week Report.

The 3/24/17 Weekend Report Preview

The Dollar
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The dollar formed a swing low on Friday.

The dollar printed it lowest point on Wednesday following the day 19 peak. That was day 33, placing the dollar deep in its timing band for a daily cycle low. The daily swing low that formed on Friday has good odds of marking the DCL. A close above the 10 day MA would signal a new daily cycle. It would also mean that the dollar did not break below the previous low of 99.19 to form a failed daily cycle. If day 33 is the DCL then the dollar would have formed a right translated daily cycle. A right translated daily cycle formation would indicate that the February DCL did host the intermediate cycle low. However, a break below the previous DCL of 99.19 will negate the right translated cycle formation. It will also signal a continuation of the intermediate cycle decline.

Stocks
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Stocks printed a lower low on Friday.

At day 57, that places stocks deep in in their timing band to print a daily cycle low. A swing low would signal a new daily cycle. I still would like to see a clear and convincing break of the (black) daily cycle trend line before being satisfied that the daily cycle low is in. However if stocks go on to rally from here and break above the declining (blue) trend line then that would signal that Friday hosted the daily cycle low. Stocks are in a daily uptrend. They 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

Daily Equity Cycle Update

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Stocks broke convincingly below the 10 day MA on Tuesday which signaled that stocks were extending their daily cycle decline.

The reasons we discussed on Tuesday that stocks ere extending their daily cycle decline included:
1) The peak on day 40 locks in a right translated cycle.
2) No trend line break.
3) No real panic (until Tuesday)

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Stocks printed a lower low on Wednesday and has formed a daily swing low on Thursday. While stocks are getting late in their timing band for a daily cycle low, I am not convinced that the swing low that formed on Thursday completes the daily cycle decline. I still would like to see a clear and convincing break of the (black) daily cycle trend line before being satisfied that the daily cycle low is in. However if stocks go on to rally from here and break above the declining (blue dashed) trend line then that would signal that Wednesday hosted the daily cycle low.