Nov 23, 2012 - Weekend Update

So far the cycles have impressed me and have really helped me keep a handle on the progress and directional movements of the market. Today was a big day for metals, and the dollar dropped like a rock.


Today was day 25 of the dollar daily cycle. We could still drop for a few more days.. which I think is highly possible. The dollar hasn't really found any significant technical support at the level where it currently sits. I'd think the price could move below the 50 DMA at $80. If so, I'd highly doubt a big move back above it on the next daily cycle rally. Take note of how the MACD histogram did a great job of predicting a downturn before it ever got here. There was a clear divergence and now we're seeing it reflected in price.

The next daily cycle for the dollar is in big trouble. We're due not only for a weekly cycle low, but we will also be in the timing band for a yearly cycle low after the new year. I expect all new rallies from the coming daily cycles to be short lived. Even if we get bad news out of the Euro, the rallies should be sold and reverse quickly. In my opinion, this is about as bearish as a chart can get. Once that $79 area neckline is met, lookout below..

Gold rallied strong today. It has broken the neckline of the iHnS.

Today is day 13 of Gold's daily cycle. We've also broken above and closed above the 50 DMA. And not shown on this chart, is that gold's close on the week shows us a weekly swing low. This is very bullish.

Here's a look at Gold's weekly swing low..

The same is true for silver.. iHnS neckline break, 50 DMA taken back, and weekly swing low formed. I expect both metals to top out in their daily cycle this week (bullishly right translated now) as the dollar continues to search for it's low. Once the dollar bounces for a few days, the metals will correct and digest a bit of these big gains and begin to move into it's daily cycle low.

The Gold miners in GDX had a great day as well. They have all but completely erased the thrashing they took last week. We've regained the 200 DMA AND the bull flag. That means that the breakout of the price below the bull flag was a false move.. and in the technical world, a false move is often met by a fast and aggressive move in the opposite direction. Let's hang on and see where this goes. The next daily cycle decline in the dollar should set these miners on fire and break this bull flag for good!

What can I say about stocks? They have posted fantastic gains out of this intermediate cycle bottom. The indicators have all turned up and we've had strong buying action for 4+ days now. The 200 DMA has been regained. Once the 50 is regained, look out..

Things are about to get really interesting..