Gold Signals New Daily Cycle

Gold printed its lowest point on day 36 to place it deep in its timing band for a DCL.

Gold formed a swing low and closed above the 10 day MA on Thursday. On Monday closed above the declining trend line to signal a new daily cycle. Gold is still contained by both the 50 day MA and the 200 day MA. Gold needs to close above both these MA’s in order for any rally to be sustained.

Stocks Lose The 10 Day MA

We discussed on Monday that one of the confirmations of a DCL is turning the 10 day MA higher. On Tuesday, stocks lost the 10 day MA and turned it lower.

Stocks needed to turn the 10 day MA higher and break above the declining trend line in order to confirm that day 21 was the DCL. Instead, losing the 10 da y MA in a clear and convincing manner signals a continuation of the daily cycle decline — making Tuesday day 27. Stocks should go on to break below the day 21 low of 4305.91 in order to complete their daily cycle decline. Stocks are in a daily downtrend. Forming a swing high below the upper daily cycle band signals a continuation of the daily downtrend and triggers a cycle band sell signal.

Stocks Need To Turn The 10 Day MA Higher

Stocks are beginning to consolidate along the 50 day MA.

One of the confirmations of a DCL is turning the 10 day MA higher. The decline into the day 21 DCL caused the 10 day MA to turn steeply lower. Stocks may need to consolidate for a few days in order to allow the 10 day MA to flatten before it can turn higher. Then stocks should go on to break above the declining trend line as they rally out of the DCL. Stocks are currently in a daily downtrend. But a close above the upper daily cycle band will end the daily downtrend and begin a new daily uptrend.

Stocks Confirm New Daily Cycle

Stocks formed a swing low on Wednesday.

Stocks delivered bullish follow through on Thursday by closing above the converging 10 day MA and 50 day MA to confirm the new daily cycle. Stocks should go on to break above the declining trend line as they rally out of their DCL.

It is quite likely that Monday was not only the DCL but the intermediate cycle low (ICL) as well. And if stocks can quickly break out to new highs then that may trigger a final melt up.

Half Cycle Low

Stocks are in a daily uptrend that is characterized by highs forming above the upper daily cycle band and lows forming above the lower daily cycle band.

Stocks rallied on Monday. If stocks form a swing low above the lower daily cycle band then stocks will remain in their daily uptrend and trigger a cycle band buy signal. And we would label day 16 as a half cycle low.

Then a close back above the 10 day MA will indicate that the trend line remains intact and that the rally continues.

Stocks Deliver Bearish Break

Stocks broke out above the day 17 high on day 24. They had been consolidating above the day 17 high — until Monday.

Stocks broke bearishly out of consolidation on Monday to close below the day 17 high and the 10 day MA. At 30 days, any bearish follow through will signal the daily cycle decline. Stocks should then go on to break below the daily cycle trend line in order to complete their daily cycle decline. Stocks are currently in a daily uptrend. But a close below the lower daily cycle band will end the daily uptrend and begin a daily. downtrend.

Stocks Deliver Bearish Follow Through

Stocks formed a swing high on Thursday then delivered bearish follow through on Friday.

Fridays’ bearish follow through closed below both the 10 day MA and the daily cycle trend line to indicate the daily cycle decline. A peak on day 17 could still result in a left translated daily cycle formation. And with stocks on week 19, this could result in an intermediate cycle decline. Typically we see a failed daily cycle in an intermediate cycle decline. A break below 4164.40 will form a failed daily cycle. Stocks are currently in a daily uptrend. They will remain so, unless they close below the lower daily cycle band.

Gold Delivers Buy Signal

Gold formed a daily swing low on Monday.

And gold also closed above the 10 day MA on Monday.

While gold did not break below the daily cycle trend line, Gold did print its lowest point on Friday, day 45. That places gold very deep in its timing band for a daily cycle low. The quick bullish RSI 05 reversal is characteristic of gold continuing its intermediate cycle advance. That aligns with gold begin in a daily uptrend. Since gold formed its swing low above the lower (and upper) daily cycle band that signals that gold remains in its daily uptrend and triggers a cycle band buy signal. So we will label day 45 as the DCL.

The 5/22/21 Weekend Report Preview

The Dollar

The dollar remains contained by the declining 10 day MA.

The dollar printed its lowest point on Friday, day 16. Which is early to expect a DCL. However there are bullish divergences developing on the oscillators, which often precede a cycle low. And Friday’s bullish candle caused the 10 day MA to begin to flatten out. A swing low and a break above the declining trend line will signal a new daily cycle. The dollar is in a daily downtrend. The dollar will remain in its daily downtrend unless it can close back above the upper daily cycle band.

Stocks

Stocks lost the 10 day MA on Monday then backtested the 50 day MA on Wednesday, forming a double bottom.

Stocks formed a swing low on Thursday. Stocks went on to close a full candle body above the 10 day MA on Friday to indicate that day 48 was the DCL. Stocks are in a daily uptrend. Closing above the upper daily cycle band indicates that stocks will remain in their daily uptrend. A close above the 4200 resistance level should lead to a trending move.

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Trend Line Break

Stocks broke below the daily cycle trend line on Tuesday.

To recap – stocks peaked on day 39. They formed a swing high and closed below the 10 day MA on day 42, which placed stocks in their timing band for a daily cycle low. Stocks went on to form a swing low on Thursday and closed at new all time highs on Friday. And in this environment of massive global liquidity it looked, in real time, as if that was all the daily cycle decline we would see.

Then stocks formed a swing high and closed back below the 10 day MA on Monday. They delivered bearish follow through by breaking below the daily cycle trend line on Tuesday. Since there is no way that the daily cycle topped on day 3, that makes Tuesday day 47 for the daily equity cycle.

Stocks are even deeper in their timing band for a daily cycle low. A swing low and close back above the 10 day MA will signal a new daily cycle. Stocks continue to be in a daily uptrend. Therefore if stocks form their swing low above the lower daily cycle band then they will remain in their daily uptrend and trigger a cycle band buy signal.