Thursday, October 14, 2010


The dollar just sliced right through the 76.50 pivot this morning. Today also happens to be the 28th day of the current daily cycle. The normal timing band for a cycle to bottom is between 20-28 days, However the Fed's threat to print, print, print appears to be going to stretch the dollar cycle slightly long this time.

We will look for the next swing low to mark the bottom of the cycle and the beginning of what should be a counter trend bounce. That bounce should be of the dead cat variety as the intermediate cycle still has 8 to 12 weeks yet before an intermediate bottom is due.

The next support zone now that 76.50 has been violated would be the rising trend line off the last 3 year cycle low in 08.

Once the counter trend bounce begins it should pressure the stock market down into the now due daily cycle low. In theory gold should also drop down into it's now overdue daily cycle correction.


  1. Toby, sorry to bother you, but you put allowed comments on this blog, not me,LOL. I am trying to understand those cycles but its really difficult.You say this dollar is approaching bottom of the cycle and counter trend bounce should occur. How long do you think that bounce could last or how long those counter trends usually last? Thank you for your answer

  2. I went over that in the last weekend report if you want to review.

  3. time to take a little leverage off?

  4. Toby,

    Gold has been having measured corrections of 25 - 50 points since this run started in late July.

    You don't think that 39 point correction over Oct 7 & 8 marked the daily cycle low?

    Are you not considering that the correction because it did not coincide with where you think the dollar is in its cycle?

  5. That is correct. Until we see the dollar rally out of it's cycle bottom I won't know whether gold is truly in a runaway move or not.

    If the pattern of measured corrections continues even through a dollar rally then there will be no question gold is in a runaway move.

    However for the most part gold has been following the dollar tit for tat and I expect a dollar rally will pressure not only the stock market, but also gold down into an easily recognizable cycle low.

  6. When the dollar rallied out of the last cycle low on Sept 6th it went from a low of 81.88 alllll the way up to a high of 82.99 before rolling over in 4 days.

    So that rally was 1.11.

    Last thursday, 10/07 the dollar had a low of 76.91 and formed a swing low on Fri the 8th.

    In three days time it rallied to 77.93 a whopping 1.02

    These numbers seem very similar .

    It seems that with the prospect of QE2, the dollar rallies have shortened in both time and points.

    I guess by Monday or Tuesday we will see if the dollar rallies off of 76.5 or continues lower.

  7. I guess, that's it. No bounce in dollar regardless of any cycles or oversold conditions.

  8. Oh I wouldn't be surprised if the dollar uses the Fed announcement of QE2 to put in that bottom today.

  9. I sure hope that you are right about that, Toby.
    I mean, this is getting ridicoulous.Every single day one of FED oficials comes out and says :"Yes, we have to do more QE"
    Isn't that little bit suspicious?
    Just how many days in a row do you have to repeat the same thing? And dollar is getting killed

  10. My advice ( to myself haha )is to make a small checklist of juniors that I'll buy if they pullback. Last time I rode a run like this (2006-2007)they ran up and repeatedly bounced of their 20dma for months, then a bigger correction sent them to their lower 50dma , and then off to the races again in another leg up. But like Toby says, I NEVER sell my core position , because that bigger correction never came when I thought it would. Happy Trading!

  11. I am looking at some gold and silver miners, but larger ones. I don't, know, juniors can be scary when things go wrong. On the other hand, holding anything is scary this days,LOL.

  12. ERI , juniors can be scary, but they re little rocket ships at this stage of the game. I chose EXK and NSU for example and followed Tobys cycle analysis. Now exk looks a bit overdone, I sell half (as the dollar bottom closes in) and next week hope to re-enter near the 20dma if it pulls back on lighter volume,and the dollar starts down again. I NEVER get exact tops or bottoms, but the % in between is still great. :)

  13. It looks like a good call from you Toby.Congratulations. I hope you will let us know how things develop with dollar further.Only thing that bothers me is if its possible for dollar to fall further against EUR and CAD and rise against CHF and AUD as weird as that might seem.But it sure looks that way on my charts.

  14. toby...
    gold is ready to go down,
    the dollar has formed a swing low and could bounce a few points,
    the markets are ready to pull back too,
    yet HUI is around its breakout at $520 & you once said you doubt that it would trade below the $520 breakout...

    just wondering if you have a new downside target for he HUI?

    thank you

  15. I said there is a possibilty that the HUI would hold the breakout, which so far it is.

    BTW the dollar hasn't made a siwng low yet. Today was an outside day. It would need to hold above the low and also trade above 77.17 on Monday to form the swing.

    But I tend to agree. Everthing, gold, stocks and dollar is running deep into the cycle timing bands. It's time for a trend reversal.

    That being said I don't trust gold one little bit so I will continue ot hold my positions, other than the AGQ position I took down because it had gotten too stretched above the 200 DMA.


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