Equity Sell Signal

Stocks have been in a daily uptrend that has been characterized by peaks above the upper daily cycle band and lows above the lower daily cycle band. While stocks remain in their daily uptrend, they delivered some sell signals on Thursday.

After dipping into a half cycle low last week stocks broke out to a new high on Tuesday and Wednesday. However stocks formed a swing high on Thursday and printed a failed breakout which signals that stocks have begun their daily cycle decline. The divergent TSI along with the bearish TSI crossover are other signals that stocks are beginning their daily cycle decline. A break below the daily cycle trend line will confirm that stocks have begun their daily cycle decline.

Meanwhile the Miners continue to develop bullishly.

After the huge day on Wednesday it is not unexpected to see the Miners give back a little on Thursday. However, the Miners continue to develop bullishly as buyers stepped in once the Miners tagged the 10 day MA. That helps to further confirm that day 26 hosted the DCL. And this has implications on the longer term intermediate cycle which I discussed in Wednesday’s Mid-Week Update.

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Bullish Expectations


We have been discussing the status of the daily equity cycle in regards to whether day 45 hosted a daily cycle low. Last week we listed what needed to occur for us to change the labeling.

Last Thursday we outlined that the daily cycle is extended past day 45 if the following occurred:
* If RSI broke below the dashed blue line
* Stocks close below the upper daily cycle band
* Deliver a bearish TSI Zero Line Crossover

Since two of the three has now happened that has now shifted my thinking that this is an extended daily cycle with Tuesday being day 59.

RSI has now made a lower low and the TSI has delivered a bearish zero line crossover. Both signal that stocks are now declining into their daily cycle low. With a peak on day 54 this is an extremely right translated daily cycle. We should see stocks break below 2566.33 in order to complete its daily cycle decline. Stocks are currently very late in their timing band for a daily cycle low and have already corrected for 5 days. So a swing low and a break above the declining trend line will confirm a new daily cycle.

The big picture is that stocks are in a daily and weekly uptrend. They will remain in their uptrend unless the close below the lower cycle band. Therefore a swing low above the lower cycle band will be a buy signal.

Proceed With Caution

Stocks printed a new daily daily cycle high on Tuesday. However, there are some bearish divergences that are developing that we will take a look at.

The bearish divergences that are developing on the momentum oscillators are often associated with a cycle decline.

There is also a bearish divergence that has been developing on the Advance-Decline line which which often heralds a daily cycle decline.

What this means is that we need to re-look at the decline into the day 45 low. While the day 45 low was in the timing band for a DCL, it did not satisfy other criteria that we look for in a daily cycle low such as:
* Causing the 10 day MA to turn lower
* A bearish TSI Zero Line Crossover
* A fib tracement of at least 38%

That leaves us with a couple of scenario’s to consider:
1) Day 45 did not host the DCL
Under this scenario, that places stocks very deep into their timing band for a daily cycle low. Therefore any daily cycle decline at this point would likely to be brief.

2) The second scenario is if, in fact, day 45 was the DCL. That would make Tuesday day 9 of a new daily cycle. In either scenario, a close below the upper daily cycle band would signal that the daily cycle is in decline. But under the second scenario with stocks being at only day 9, that leaves 4 – 6 weeks before stocks would be in their timing band for a daily cycle low.

In either scenario, selling on a close below the upper daily cycle band would limit the downside risk. Long positions can be re-entered if the decline did not close below the lower daily cycle band and stocks closed back above the 10 day MA.

But if stocks close below the lower daily cycle band, then this is not the time to throw caution to the wind …

 

Extremely Right Translated

Stocks broke out to new highs on Monday. We previously discussed the possibility that Thursday hosted a one day daily cycle decline. But with the Monday’s bearish engulfing candle and a divergent TSI, that makes it likely that stocks are beginning their daily cycle decline.

Monday was day 43 for the daily equity cycle. Since stocks last printed a yearly cycle low the daily cycles have averaged 42 days. Which means that stocks are in their timing band for their daily cycle low. Typically a daily cycle decline can last 7 to 15 days. However, a new high on day 43 makes this an extremely right translated daily cycle formation.

Let’s take a look at what happened the last time stocks formed an extremely right translated daily cycle back in May.

Back in May the daily equity cycle peaked on day 35, forming an extremely right translated daily cycle. Stocks only declined 2 days before it was back to the races. I am not saying that stocks will only decline for 2 days. But we need to be open to the possibility.

Stocks continue to close above the upper daily cycle band, indicating that they are in a daily uptrend. As long as a swing low forms above the lower daily cycle band, then stocks will remain in their daily uptrend.

Beware Bonds

Bonds finally appear to have confirmed a new daily cycle.

Bonds printed their lowest point last Friday. That was day 12, which is usually too early for a daily cycle low. However bonds have now:
* Broke above the declining trend line
* Delivered a bullish zero line crossover on the TSI
* Closed above the lower daily cycle band
* Closed above the 10 day MA
* Managed to turn the 10 day MA higher.

All of which convinces me that day 12 hosted the DCL.

The bigger picture is that bonds are in their timing band for a yearly cycle low and are in an interemdiate cycle decline.

Bonds have formed a monthly swing high in October. A monthly swing high is required for the yearly cycle decline. Bonds will need to deliver some bearish follow through to confirm that the yearly cycle is in decline.

Bonds are already in a daily downtrend. If the yearly cycle decline has begun then I suspect that we will see bonds backtest the 50 day MA and then rollover into another left translated daily failed cycle in order to complete the yearly cycle decline.

Bullish Uptrend

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The daily equity cycle has been forming a mini triangle consolidation since peaking last Thursday which was day 19.

spx

Stocks are currently on day 24 for their daily cycle. That is 6 days shy of the normal timing band for a daily cycle low. Closing below the 10 day MA along with the bearish TSI divergence suggest that stocks are setting up for completing their daily cycle decline.

spx_2

So if stock break bearishly to complete 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.

The 7/01/17 Weekend Report Preview

The Dollar
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The dollar breaking lower on Tuesday signaled that it is still declining into its yearly cycle low. The decline into the yearly cycle low is obscuring our daily cycle counts. What is clear is that the dollar is in a daily downtrend. The dollar will continue in its daily downtrend until it closes above the upper daily cycle band.

Under the premise that a cycle cannot failed, then break to a new high without beginning a new daily cycle leads me to believe that day 39 hosted the DCL instead of June 5th. That would mean make Friday day 27, placing the dollar in its timing band for a daily cycle low. With the TSI at a level that has marked other DCL’s, once a swing low forms it will likely signal a new daily cycle.

Stocks
stocks

After peaking on day 21, stocks formed a swing high and broke convincingly below the daily cycle trend line on Tuesday to confirm the daily cycle decline.

Stocks printed their lowest point on Thursday, tagging the 50 day MA. Thursday was day 29, placing stocks 1 day shy of its timing band for a daily cycle low. A swing low and a break of the declining trend line will confirm that day 29 hosted the daily cycle low. Stocks remain in a daily uptrend. Stocks will continue in their uptrend until it closes below the lower daily cycle band.

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Oil Bounce or Oil Bull?

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Oil printed its lowest point on week 18, following the week 7 peak. While 18 weeks is a bit early to expect to see an intermediate cycle low, the weekly swing low and bullish follow through indicate otherwise …

oil weekly

Oil consolidated in a narrow trading range over 11 weeks before declining into the week 18 low. Normally a break out of a narrow range yields a trending move. But the move lower was halted by the 50 week MA, which has also stopped the previous 2 intermediate cycle declines. This has me suspicious that the move lower was a fake out move. And now we see that the the weekly TSI has formed a bullish crossover after emerging from a level that has marked the previous yearly cycle low.

oil weekly 2

If oil is still declining into its intermediate cycle low then it should be turned back at the declining weekly trend line. However a bullish break above the declining weekly trend line will signal that week 18 did host an early intermediate cycle low. We also need to recognize that oil established a weekly uptrend by closing above the upper weekly cycle band before it began its intermediate cycle decline. And oil remains in its weekly uptrend since it not close below the lower weekly cycle band as it declined into the week 18 low.

The 3/17/17 Weekend Report Preview

The Dollar
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The dollar is getting late in its timing band to form a daily cycle low.

The dollar printed its lowest point on Friday, following the day 19 peak. The dollar’s daily cycle has averaged 31 days since printing its yearly cycle low in May. Friday was day 30, placing the dollar in its timing band to a daily cycle low. A swing low and a break above 100.28 will form a daily swing low. Then a close above the declining trend line will confirm the new daily cycle. Since the declining trend line is over 1.6% away we will use a close above the declining 50 day MA as confirmation of a new daily cycle.

1 $$$ d aily 00

The peak on day 19 indicates a right translated daily cycle formation and the the February DCL also hosted an intermediate cycle low. But by closing below the lower daily cycle band, that ends the daily uptrend and is a signal that the next daily cycle may form as a left translated cycle.

Stocks
stocks

The daily equity cycle peaked on day 40, formed a swing high then broke below the (red-dashed) accelerated trend line to signal the daily cycle decline.

Stocks printed their lowest point on day 46. That was not enough to break below the (black) daily cycle trend line. But 46 days places stocks in the later stage of its timing band for a daily cycle low. There were other indicators that day 46 hosted the DCL including the TSI bearish zero line crossover prior to day 46 and the bullish TSI zero line crossover following day 46. Stocks also closed convincingly above the 10 day MA on Wednesday providing more confirmation that Day 46 hosted the DCL.

Stocks are in a daily uptrend and will continue in its 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

For subscribers click here.

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

Potential Inflection Points

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The dollar has been in a daily downtrend that has been characterized by peaks printing below the upper daily cycle band and lows forming below the lower daily cycle band. The dollar reached a potential inflection point on Tuesday.

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Tuesday was day 8 for the dollar’s daily cycle. Left translated daily cycles typically roll over by day 8. The dollar is also up against resistance from the 50 day MA. A swing high here should send the dollar into its daily cycle decline.

Bonds also appear to be at an inflection point.

tlt

Bonds closed above the upper daily cycle band on day 9 trying to re-establish its daily uptrend. It has since formed a swing high and trended lower. Bonds did print a reversal off of the daily cycle trend line on Tuesday. Closing below the 10 day MA and forming a bearish zero line crossover on the TSI are signals that the daily cycle is in decline. Bonds will need to form a swing low here to avoid breaking below the daily cycle trend line, which would confirm the daily cycle decline.