No confirmation yet but the weakness in stocks and metals likely coincides with a bounce in the dollar. At this point we are not far from breaking the daily cycle trend line. The dollar is on day 34, so the dollar is in the timing band for a daily cycle low. I think the dollar bottomed on day 31. We have a swing low but price needs to move above the daily cycle trend line for confirmation.
If this is true, what does it mean for stocks and metals? I think it means some choppiness near term but that should be about it. The dollar is only on week 14 of the intermediate cycle and should still have another 2-9 weeks before the intermediate cycle bottoms. My expectation is that the dollar should breach the daily cycle trendline by the end of the week then resume lower. We could see some chop with the metals, and we could finally get that highly anticipated half cycle low on stocks. We are still bullish stocks and metals and bearish the dollar, but short term anything can happen.
In real time, it is impossible to tell you exactly what to do. We expect to have days such as this, but what if it turns into something more? These kinds of days are unavoidable. The question becomes what if this turns into something bigger? We really have no way to know.
Personally, I have a strong hand now. I have done well enough since the election that I can withstand the draw down and ride it out a bit longer. That is what you can do when you buy at the very bottom of a cycle. Some of you added positions late and the decision becomes more difficult for you.
Every trader we have has a different situation. Let us know if you need some personal advice with your account.
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