Dollar Update

The dollar formed a bearish reversal on Wednesday. Wednesday was day 33 for the dollar’s daily cycle.  That places the dollar in its timing band for a daily cycle decline. 

The dollar delivered bearish follow through on by forming a swing high on Thursday. A break below the accelerated (dashed) trend line will signal the daily cycle decline. The dollar should go on to break below the rising blue trend line in order to complete its daily cycle decline. The dollar is currently in a strong daily uptrend. The dollar will remain in its daily uptrend unless it closes below the lower daily cycle band.  

Declining Trend Line

Stocks closed lower again on Monday.

Stocks are getting stretched below the 10 day MA and approaching a possible support level at the June DCL. We could see stocks deliver a dead cat bounce, which will help to allow the 10 day MA to catch up to price. With stocks needing another 3 – 4 weeks to be in their timing band for a DCL, any bounce will likely set the declining trend line. Stocks are currently in a daily downtrend. They will remain in their daily downtrend unless they close back above the upper daily cycle band.

The 9/24/22 Weekend Report Preview

The Dollar 

The Fed decision to raise rates caused the dollar to break out to a 20 year high.  

Friday was day 30 for the dollar’s daily cycle.  The new high on day 30 locks in a right translated daily cycle formation.  30 days also places the dollar in its timing band for a daily cycle decline. The dollar will need to form a swing high and break below the accelerated (dashed) trend line to signal the daily cycle decline. The dollar is currently in a strong daily uptrend.  The dollar will remain in its daily uptrend unless it closes below the lower daily cycle band.  

Stocks 

When stocks undercut the day 54 low last Friday, the bullish divergence on the oscillators indicated a continuation of the daily cycle decline.

When stocks formed a swing low on Monday it looked, in real time, that the undercut-extended daily cycle low scenario was valid. Then stocks were rejected by the breakdown level on Wednesday then delivered bearish follow through on Thursday and Friday. Therefore we will label day 54 as the DCL, making Friday day 13 of a failed daily cycle. And losing the breakdown level signals that stocks have entered a bloodbath phase. A break below the previous DCL of 3636.87 will form a failed daily cycle to signal the intermediate cycle decline.  

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Undercut –> Still In Play

Stocks printed a lower low on Tuesday.

Tuesday was day 64 for the daily cycle, placing stocks very deep in their timing band for a DCL. There are bullish divergences developing the oscillators that often proceed the cycle low. A swing low and recovery of the 8886.75 breakdown level will indicate the DCL. A close back above the 10 day MA will provide more assurance that day 64 was the DCL However stocks will not be out of the woods until they can close above the declining trend line.

The Miners Are Ready To Cross The Line

The Miners printed their lowest point on day 28, placing them in their timing band for a DCL.

The Miners formed a swing low on last Wednesday then closed above the 10 day MA on Thursday to signal the new daily cycle. The Miners proceeded to deliver bullish follow through to see them testing the declining 50 day MA on Monday.

The Miners lost the 50 day MA back in April. We could see the Miners trade sideways to allow the 50 day MA to flatten out. No trending move will be able to gain any traction until the Miners are able to close back above the declining 50 day MA. The Miners are currently in a daily downtrend. The Miners will remain in their daily downtrend unless they close above the upper daily cycle band.

Happy Days Are Here Again

Stocks formed a swing low on Wednesday.

Stocks printed their lowest point on Tuesday, day 54, placing them very deep in their timing band for a DCL. Stocks formed a swing low on Wednesday. Stocks delivered bullish follow through on Thursday and Friday. Stocks closed above the 10 day MA on Thursday then closed above both the 50 day MA and the declining trend line to confirm day 54 as the DCL so happy days are here again.

Actually, overhead resistance from the 4100 level and the declining 200 day MA are a cause for concern. I have other concerns which I discuss in the Weekend Report.

Daily Cycle Update

Stocks printed their lowest point on Tuesday, day 54. That places them deep in their timing band for a DCL.

Stocks formed a swing low on Wednesday then closed above the 10 day MA on Thursday to signal the new daily cycle.  I would like to see a close above the 50 day MA before we day 54 as the daily cycle low.  Stocks should then go on to break above the declining trend line as they rally out of the DCL. Stocks are currently in daily downtrend.  They will remain in their daily downtrend unless they close back above the upper daily cycle band.

Waiting On The Dollar

Gold peaked on August 10th, then began its daily cycle decline.

Gold printed its lowest point on day 30, placing it in its timing band for a DCL. While gold has formed a daily swing low, gold still needs to break above the declining trend line to confirm the new daily cycle.

Stocks peaked on August 16th then began its daily cycle decline. Stocks formed a lower low on Tuesday to extend its daily cycle decline. Tuesday was day 54, placing stocks deep in their timing band for a daily cycle low.

Both gold and stocks have been trading inversely with the dollar. The dollar bottomed on August 11th. And since the dollar began to rally, both gold and stocks began their respective daily cycle declines. I suspect that both gold and stocks are not likely to regain their footing until the dollar begins its daily cycle decline.

Another Low Risk Opportunity

Thursday was day 52, pacing stocks deep in their timing band for a DCL. Since August of 2014 close to 80% of the daily cycles bottomed at or before day 52.

Stocks formed a bullish reversal on Thursday, easing the parameters for forming a swing low. Stocks have retraced to the 50 % fib level and breached the daily cycle trend line. So if stocks form a swing low, the odds are good that will mark the DCL. A low risk entry can be taken on a swing low, using Thursday’s low as the stop. 

Low Risk Entry

Stocks may have found support at the 50 day MA.

Monday was day 49, pacing stocks deep in their timing band for a DCL. Stocks have retraced past the 38 % fib level and formed a narrow range day on Monday just above the 50 day MA. Stocks still could go lower to break the daily cycle trend line. However, since August of 2014 over 75% of the daily cycles bottomed at or before day 49. Monday’s narrow range day eases the parameters for forming a daily swing low. And with possible support from the 50 day MA, if stocks form a swing low — that could mark the daily cycle low. A low risk entry can be taken on a swing low, using the 50 day MA as the stop.