The 8/06/22 Weekend Report Preview

The Dollar 

The dollar printed its lowest point on Tuesday, day 25, to place it in the early part of its timing band for a daily cycle low. 

The dollar formed a swing low and closed back above the 10 day MA on Wednesday to signal that day 25 was the DCL.  The dollar should go on to turn the 10 day MA higher as it rallies out of its DCL. The dollar is currently in a daily uptrend.  The dollar will remain in its daily uptrend unless it closes below the lower daily cycle band.

Stocks

Stocks formed a daily swing high on Friday.

Friday was day 33, that places stocks in their timing band for a DCL.

If stocks deliver bearish follow through and close below the accelerated (dashed) trend line, that would signal the daily cycle decline. Stocks should then go on to break below the (blue) daily cycle trend line as they seek out their DCL. Stocks are currently in a daily uptrend. They will remain in their daily uptrend unless they close below the lower daily cycle band.

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Gold Delivers Buy Signal

Gold rallied for 1.72% on Thursday to close above the 50 day MA.

Notice how RSI 05 is embedding in overbought.  That signals that gold has begun the advancing phase of a new intermediate cycle.  That aligns with gold being in a daily uptrend. Forming a swing low and above the upper daily cycle band indicates a continuation of the daily uptrend. and signals a cycle band buy signal.

Stocks Form Daily Swing High

Stocks ran into resistance at the 4150 level on Monday then formed a daily swing high on Tuesday.

Tuesday was day 30 for the daily equity cycle. That places stocks in their timing band for their daily cycle decline. If stocks deliver any bearish follow through and close below the 10 day MA, that would signal the daily cycle decline. Stocks are currently in a daily uptrend. They will remain in their daily uptrend unless they close below the lower daily cycle band.

Stocks Running Into Resistance

Stocks printed a new daily cycle high on Monday. The new high on day 29 locks in a right translated daily cycle formation.

At 29 days, stocks are in the early part of their timing band for a DCL. Stocks are getting stretched above the 10 day MA and they are running into resistance at the 4150 level. If stocks can break through this resistance then there is little to stop them for testing the 200 day MA. But, rejection by the 4150 resistance level would signal the daily cycle decline. Stocks are currently in a daily uptrend.  Stocks will remain in their daily uptrend unless they close below the lower daily cycle band.  

False Breakout On Bonds

Bonds broke out to a new daily cycle high on Friday, but then lost the breakout out on Monday.

Monday was day 25 for the daily bond cycle, placing it in the early part of its timing band for a daily cycle low. Losing the breakout indicates that bonds are feeling the gravitational pull of the pending DCL.

If bonds delver bearish follow through and close below the 10 day MA that would indicate the daily cycle decline. Bonds are currently in a daily uptrend. If bonds form a swing low above the lower daily cycle band then they will remain in their daily uptrend and signal a cycle band buy signal.

Stocks Break Bullishly Above Trend Line

Stocks have been halted by the declining trend line since late March — until this week.

Stocks broke above the declining trend line on Tuesday then delivered bullish follow through on Wednesday and Thursday. Closing above the declining intermediate trend line indicates that June 17 marked not only the daily cycle low, but the intermediate cycle low as well. That aligns with stocks closing above the upper daily cycle band on Thursday.

Closing above the upper daily cycle band ends the daily downtrend and begins a new daily uptrend. Closing above the upper daily cycle band also signals that the intermediate cycle low has been set.

Biotech Buying Opportunity

Biotech has been leading stocks out of the recent cycle low.

Biotech became a bit stretched above the 10 day MA on Friday. Biotech retraced Monday and Tuesday, tagging the 10 day MA on Tuesday. Biotech is currently in a daily uptrend. If Biotech forms a swing low above the upper daily cycle band then that will indicate a continuation of the daily uptrend and signal a cycle band buy signal. A break above 124.64 will form a swing low.

Bonds About To Deliver A Buy Signal

Bonds formed a swing low on Monday.

The rally out of the day 27 DCL low saw bonds close above the upper daily cycle band to establish a daily uptrend. Bonds became stretched above the 10 day MA on day 11, formed a swing high on Wednesday then continued lower through Friday.

Bonds formed a swing low and regained the 10 day MA on Monday. A close back above the 50 day MA will indicate a continuation of the daily uptrend and signal a cycle band buy signal. I believe that the longer term intermediate and yearly cycle lows also formed as well, which I plan to discuss in the Weekend Report.

Biotech Delivers Bullish Follow Through

On Saturday we noted how Biotech is the early leader out of the daily cycle low. On Tuesday Biotech delivered bullish follow through.

Prior to the June low, RSI 05 was in a bearish pattern – embedding in oversold and quickly reversing once overbought. That is changing. RSI 05 is beginning to embed in overbought – which is characteristic of an intermediate cycle advance. That aligns with Biotech being in daily uptrend. Biotech will remain in its daily uptrend unless it close below the lower daily cycle band.