Perfect Storm

On February 10th and February 16th we discussed how stocks were in their timing band for an intermediate cycle decline. We also discussed the emerging health concern presented by the Coronavirus that was causing massive disruptions that impacted manufacturing worldwide. It seems that these concerns finally came together to form the Perfect Storm.

The Dow Jones Industrial dropped over 1000 points on Monday. The S&P was down over 120 points. Both indices broke below their previous daily cycle low to form a failed daily cycle. Over the past 2 years (14 daily cycles) stocks averaged 39.54 days per daily cycle. Monday was only day 15 for the daily equity cycle. If stocks run their average cycle, then stocks would need over 4 more weeks before printing their daily cycle low.

The Fed will certainly try to rescue the market so I think that we will likely see a bounce at some point. The earliest that stocks printed a daily cycle low over the past 2 years was 23 days. So until stocks get closer to their timing band, any attempt to rescues the market may not gain any traction.

Canary in the Coal Miner Update

On February 16th we discussed how China was being impacted by the Coronavirus. The impact continues to worsen. The Novel Coronavirus (COVID-19) outbreak and related quarantines continue to impact business and technology supply chains at Apple, Google, Qualcomm, Nintendo, Tesla and elsewhere.

* Airbus: The company shut down a factory in China that accounts for almost 10 percent of the production of its most popular jet
* Apple on February 1 said it would close its stores in mainland China, one of its biggest markets, until February 9.
* Hyundai Motor: The company is idling all seven of its plants in South Korea because of a lack of parts from suppliers in China.
* Mobile World Congress (MWC) Barcelona 2020: MWC organizers on February 12 officially canceled the event.
* Robert Bosch: The chief executive of Robert Bosch, the world’s biggest auto components supplier, warned that coronavirus could impact its global supply chain.
* Starbucks: The global coffee store chain temporarily closed more than half of its stores in mainland China.
* Tesla: The automaker warned of delivery delays in China. Deliveries set for early February would be affected. Tesla’s new factory in Shanghai has been closed due to the outbreak.

And millions of Chinese furs face collapse due to a liquidity squeeze brought on by dwindling cash reserves.

The impact of the Coronavirus on global supply chains are being felt worldwide, yet stocks are near all-time highs.

This was week 20, placing stocks in their timing band for an intermediate cycle decline. Stocks printed a bearish weekly reversal this past week. The bearish weekly reversal eases the parameters for forming a weekly swing high. A break below 3328.45 would form a weekly swing high to signal the intermediate cycle decline. The are bearish divergences developing on the weekly oscillators which ofter precede a cycle decline. And once the impact of the Coronavirus starts to get priced in, that should help to send stocks into their intermediate cycle decline.

The 2/22/20 Weekend Report Preview

The Dollar

 
The dollar formed a daily swing high on Friday.

Friday was day 35 for the dollar’s daily cycle. That places the dollar in its timing band for a daily cycle low. A close below the 10 day MA will indicate the daily cycle decline. The dollar then should break below the daily cycle trend line before forming its DCL. The dollar is in its daily uptrend and will remain so unless it closes below the lower daily cycle band.

Stocks

 
Stocks formed a daily swing high on Thursday and then closed below the 10 day MA on Friday.

Stocks closed below the 10 day MA on Friday and have begun to turn the 10 DMA lower — indicating that stocks have begun their daily cycle decline. Stocks did back test the previous daily cycle high on Friday. It is possible that if stocks form a swing low on Monday, then we would label Friday as a half cycle low. But if stocks deliver bearish follow through on Monday that would indicate the daily cycle decline. A peak on day 12 would set stocks up for a left translated daily cycle formation which would herald the intermediate cycle decline. Stocks are currently in a daily uptrend and will remain so 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

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You can email me at likesmoney@gmail.com to receive a sample copy of the Weekend Report

Potential False Weekly Breakout Developing

Stocks appear to be developing a false weekly breakout.

Stocks have been contained by resistance at the 3330 over the past several weeks. This week stocks broke cleanly above the 3330 level. But already appear to be developing an upper shadow on the weekly candle. This is week 19 for the intermediate equity cycle, placing stocks in their timing band for an intermediate cycle low. There are bearish divergences developing on the weekly oscillators that often accompany a cycle top. A close below the 3330 level would form a bearish weekly reversal which would indicate the intermediate cycle decline.

And as we discussed on Monday, there is a potential Black Swan Event developing in China due to Coronavirus. And the economic impact of the Coronavirus can help to intensify the pending intermediate cycle decline.

Time to Dance Close to The Exit

February is month 14, placing stocks late in their timing band for a yearly cycle decline. Stocks are also in their timing band for a weekly (intermediate) cycle decline. So we need to be on “our toes” for a left translated daily cycle formation to develop that will trigger an intermediate and possibly yearly cycle decline.

Despite closing at all time highs, there are bearish divergences developing which often herald a cycle decline. And with a potential Black Swan Event developing in China with Massive Manufacturing Disruptions Due to Coronavirus it looks like its time to be dancing close to the exit.

The 2/08 20 Weekend Report Preview

The Dollar

 
The dollar closed below the 10 day MA, the 200 day MA and the 50 day MA on day 21 to signal the daily cycle decline.

Any other asset that closes below the 3 moving averages listed above would surely continue the cycle decline. But due to the currency manipulation, the dollar regained all 3 moving averages on Monday and then broke convincingly out to new highs through Friday. The new high on Friday, day 26, locks in a right translate daily cycle formation which aligns with the dollar being in a daily uptrend. The dollar will remain in its daily uptrend unless it closes below the lower daily cycle band.

Stocks

 
Stocks printed their lowest point on day 40, placing them late in their timing band for a daily cycle low.

Stocks formed a swing low and closed above the 10 day MA and the declining trend line on Tuesday to confirm the new daily cycle. Then stocks delivered bullish follow through on Wednesday and Thursday. The rally out of the DCL has caused stocks to become stretched above the 10 day MA and may need to consolidate in order to allow the 10 day MA to catch up to price. Stocks are in a daily uptrend and will remain so 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

Miner Risk/Reward


 

On Monday we discussed that a break below the (red) trend line would send the Miners into a daily cycle decline.

The Miners printed their lowest point on Tuesday, which was day 55, placing them late in their timing band for a daily cycle low. The Miners formed a swing low on Wednesday, off of support from the 50 day MA. The Miners then delivered bullish follow through on Thursday to signal a new daily cycle. A close above the 10 day MA will have us label day 55 as the DCL.

Long positions can be entered with the stop being placed below Tuesday’s low. Until the Miners break above the upper trend line there is a risk of being whipsawed as the Miners continue to work through the multi month consolidation. Waiting on a break above the declining trend line will reduce the risk of being whipsawed at the expense of missing out on part of the potential rally.

Stocks Confirm New Daily Cycle

Stocks dropped 1.77% on Friday to print their lowest point following the day 33 peak.

Friday was day 40, placing stocks late in their timing band for a daily cycle low. Stocks rallied on Monday and then delivered bullish follow through on Tuesday by closing above the declining trend line and the 10 day MA to confirm Friday as the daily cycle low. Stocks had been in a daily uptrend. Forming the swing low above the lower daily cycle band signals that stocks remain in their daily uptrend and triggers a cycle band buy signal.

In the Mid-Week Update I plan to discuss how stocks are in the process of negating their weekly swing high and what that might mean.

The 2/01/20 Weekend Report Preview

The Dollar

 
The dollar formed a swing high on Thursday.

The dollar delivered bearish follow through by closing below the 10 day MA, the 200 day MA and the 50 day MA — which confirms the daily cycle decline. Closing below all of those MA’s also signals something more sinister is afoot, which I cover in the Weekend Report. Friday was day 21, placing the dollar in the early part of its timing band for a daily cycle low. A swing low and close back above the 50 day MA would signal the DCL. The dollar is in a daily uptrend. The dollar will continue in its daily uptrend until it closes below the lower daily cycle band.

Stocks

 
Stocks formed a swing low off of the day 36 low. Since 36 days places stocks in their timing band for a daily cycle low, Tuesday’s swing low signaled a new daily cycle.

Stocks failed to close above the 10 day MA to confirm the new daily cycle and then broke lower on Friday, extending the daily cycle decline. Friday was day 40, placing stocks deep in their timing band for a daily cycle low. A swing low accompanied by a break of the declining trend line will confirm the new daily cycle. Still, stocks are in a daily uptrend and will remain so 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

Not Out Of The Woods Yet

Stocks formed a swing low on Tuesday.

Stocks printed their lowest point on Monday, day 36, placing them in their timing band for a daily cycle low. Tuesday’s swing low and close above the upper daily cycle band signals a new daily cycle. And while Stocks did rebound off the 38 fib level and RSI has also turned higher — indicative of an intermediate cycle advance … we are not out of the woods yet. We will need to see a close above the 10 day MA to label day 36 as the DCL.

In the Mid-Week Update I plan to cover whether stocks are out of the woods in regards yet to their weekly cycle.