Cycle Turn Indicator Direction and Swing Summary. of Select Markets as of the close on. December 6, Daily CTI. Swing

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1 Cycle Turn Indicator Direction and Swing Summary of Select Markets as of the close on December 6, 2018 Market Daily CTI Daily Swing Weekly CTI Weekly Swing Industrial Negative High Positive Low Transports Negative High Positive Low NDX Negative High Positive Low S&P Inverse Fund Positive N/A * Negative High CRB Index Negative High Positive Low Gold Positive Low Positive Low XAU Positive High Positive Low Dollar Negative Low Negative High Bonds Positive Low Positive Low Crude Oil Negative High Positive Low Unleaded Positive High Positive High Natural Gas Negative High Negative Low *Since this fund is quoted at the end of the day it is impossible for the concept of swing highs and lows to apply on a daily level. The primary interests here are the weekly developments. The daily is representative of the short-term and the weekly is representative of the intermediate-term Copyright 2018 by Tim Wood 3

2 Short-term Updates Note on the Cycle Turn Indicator The most important indicator we have is the Cycle Turn Indicator and the most important timeframe, at least in my mind, is the intermediate-term. This indicator has proven itself time and time again. In reality, this is all we really need to know. Everything else is secondary. That being said, please be sure to monitor the "Cycle Turn Indicator Direction and Swing Summary" above. Red indicates that a swing high and down turn of the Cycle Turn Indicator has occurred and lower prices should follow. The only exception here is that on the daily stock market signals we also want to see both the slow cycle Turn Indicator and the New High/New Low Differential in agreement with the original Cycle Turn Indicator, which is what is covered in this summary above. Yellow, is cautionary meaning that the Cycle Turn Indicator and the swing are not in agreement, which is typically indicative of a trend change. Green, means that a swing low has occurred and that the Cycle Turn Indicator is positive, which should be followed by higher prices. Again, the only exception here is the daily stock market signals in that we want to see both the slow Cycle Turn Indicator and the New High/New Low Differential in agreement with the original Cycle Turn Indicator, which is what is covered in this summary above. For everything else, all that matters is the formation of a swing and the direction of the Cycle Turn Indicator. All subscribers who do not understand cyclical translation should click here "Notes for New Subscribers." It is important that you read and understand the content found in both of the PDF files that you will find at this link. Copyright 2018 by Tim Wood 4

3 Stocks End of Week Intermediate-Term Indicator Summary Intermediate-Term Neutral Primary Indicators Formation of a Weekly Swing Low Cycle Turn Indicator (CTI) CTI on Rydex Tempest Fund * Confirming Indicators Trend Indicator (TI) Advance/Decline Issues Diff New High New Low Diff Secondary Indicators Negative Stochastic Cycle Momentum Indicator *When this indictor is it is negative for the market and visa versa. December 6, 2018 Daily Indicator Summary Short-Term Sell/Neutral Primary Indicators Formation of a Daily Swing High Cycle Turn Indicator (CTI) Slow Cycle Turn Indicator (CTI) New High/New Low Differential Confirming Indicators Trend Indicator (TI) McClellan Intermediate Term Breadth Momentum Oscillator (ITBM) McClellan Intermediate Term Volume Momentum Oscillator (ITVM) McClellan Summation Index McClellan Volume Summation Index Secondary Short Term Indicators Stochastic Cycle Momentum Indicator Trading Cycle Oscillator Momentum Indicator Ratio Adjusted McClellan Oscillator Crossover Accumulation/Distribution Index With Equities, the October 29th low marked the trading cycle low. Based on the current structure and evidence at hand, we have been operating under the assumption that we have a failed and left-translated trading cycle at play with the risk of it also being a failed and left-translated intermediate-term cycle. As a result of this structure, the expectation has been for the decline into this trading cycle low to carry price below the October low. And, having seen the AMEX, the NDX, the CAC and the DAX already having moved below their October trading cycle lows served to even further this expectation. With all that said, I have also talked about market miracles and in the Tuesday night update I specifically mentioned the release of timely news events to stem the decline. Low and behold, as the market was getting clobbered on Thursday and approaching the ever so important October low, the news story broke regarding more cautious rate hikes. I m sure you all know this, but the following is straight from the Wall Street Journal. On Thursday, the Dow Jones Industrial Average tumbled as much as 785 points before paring those losses. The rebound accelerated late in the session after The Wall Street Journal reported on the Fed s evolving Copyright 2018 by Tim Wood 5

4 thinking on rates. This is exactly the sort of thing I was talking about. The repeated pattern of targeted news at important technical junctures is not a new practice and it will continue to work until it doesn t. It should be fairly obvious that technicals are being watched. More importantly, it should be obvious that the current market risks associated with the current technicals are also well understood. That all aside, based on the current structure and normal cyclical behavior, lower prices into the trading cycle low should prevail and as I have been saying, the higher degree risk continues to also be of a failed and left-translated intermediate-term cycle top. The short-term buy signal in Gold remains intact, but the trading cycle top should be at hand. Once daily swing highs and short-term sell signals are seen on both Gold and the XAU, this counter-trend advance should have finally run its course. We knew that the advance in Crude Oil should be counter-trend and per the parameters given Tuesday night, a daily swing high was completed and this counter-trend top should now be in place. A short-term sell signal was also triggered on the CRB Index and the counter-trend top there should also be in place. Tuesday s short-term sell signal on the Dollar remains intact and it continues to be at risk of greater weakness in association with the now due intermediate-term cycle top. The short and intermediate-term buy signals on Bonds remains intact. Copyright 2018 by Tim Wood 6

5 The first chart below shows our distribution indicator and there have been no changes here. The red intermediate-term Advancing issues line is tied to the intermediate-term cycle, which has begun turning back down. The crossing of the green MA line, above the black MA line, is suggestive of the October low having marked the intermediate-term cycle low and a turn back down will be suggestive of the intermediate-term cycle top, as will a crossing of the red line below the two MA lines. Copyright 2018 by Tim Wood 7

6 The Trading Cycle Oscillator in the upper window has made a solid turn from overbought levels, which suggests that the decline into the trading cycle low should just be beginning. The Momentum indicator has also turned down below its zero line, which is also suggestive of the same. The stochastic in the middle window continues to weaken and is also suggestive of lower prices as well. The first of our Primary Short- Term Indicators is the New High/New Low Differential, plotted with price, which is now sitting at its lowest level since February Such readings are often associated with intermediate-term cycle lows, which suggests that we could be moving into the intermediate-term cycle low in conjunction with this next trading cycle low. But, based on the overall oscillator picture, even if that is the case, we should not ideally be there yet. That said, such readings are often associated with even lower readings and accelerated declines as was seen in 1966, 1969, 1970, 1973, 1974, 1987, 1998, 2001, 2002, 2008 and So, let me be clear. This is not to say that a low is necessarily imminent because typically even lower levels follow. But, it does mean that we could be approaching an intermediate-term cycle low in conjunction with this next trading cycle low. Another observation is that such readings as we are now seeing have historically occurred with declines following 4-year cycle tops. Therefore, even if we are moving into an intermediate-term cycle low, this is suggestive of the 4-year cycle top and for this reason the advance out of the intermediate-term cycle low should prove to be counter-trend. I will cover this more in the December letter. The Trend Indicator remains above its trigger line. Copyright 2018 by Tim Wood 8

7 The Three Primary Short-Term Indicators are the Original and the Slow Cycle Turn Indicators, both plotted below, and the NYSE New High/New Low Differential, plotted with price above. A daily swing high was completed on Tuesday and as a result we knew that the counter-trend top should be in place. It was because the Slow Cycle Turn Indicator remained positive that a short-term sell signal wasn t triggered, but with its downturn on Thursday a signal was triggered. I never like it when price bounces off of the lows on the day a signal is triggered, but this signal is nonetheless in place and based on the overall price/oscillator picture lower prices should follow. Bottom line, this sell signal will stand until another daily swing low and upturn of the Primary Short-Term Indicators is seen. Copyright 2018 by Tim Wood 9

8 Both the Intermediate Term Breadth Momentum Oscillator and the Intermediate Term Volume Momentum Oscillator remain positive. Copyright 2018 by Tim Wood 10

9 The McClellan Oscillator and Summation Indexes are also used to measure the intermediate- term internals. The Ratio Adjusted McClellan Oscillator in the upper window is shorter-term in nature and is therefore used to help identify the shorter-term tops and bottoms, but it is also useful in identifying intermediate-term cycle tops and bottoms. Both the McClellan Summation Index and the McClellan Volume Summation Index have turned down, which serves to further confirm the half-trading cycle counter-trend top. The Ratio Adjusted McClellan Oscillator remains just below its zero line, which leaves equities positioned for even greater weakness into the trading cycle low. Copyright 2018 by Tim Wood 11

10 Next is the Smoothed McClellan Oscillator, which remains above its trigger line. Copyright 2018 by Tim Wood 12

11 The Accumulation/Distribution Index continues to weaken, but has only just begun to turn down, which is suggestive of further weakness into the trading cycle low. In Summary, the anticipated top should be in place and with most of the oscillators only marginally beginning to turn, lower prices into the trading cycle low should follow in association with a failed and lefttranslated trading and what may possibly also be a failed intermediate-term cycle top as well. The risks associated with the current structure remain high! Copyright 2018 by Tim Wood 13

12 Gold End of Week Intermediate-Term Indicator Summary Intermediate-Term Sell Daily Indicator Summary Short-Term Buy/Neutral Primary Indicators Formation of a Weekly Swing High Cycle Turn Indicator (CTI) Confirming Indicators Trend Indicator (TI) Cycle Momentum Indicator Secondary Indicators Stochastic Primary Indicators Formation of a Daily Swing Low Cycle Turn Indicator (CTI) Confirming Indicators Trend Indicator (TI) Cycle Momentum Indicator Secondary Short Term Indicators Stochastic The timing band for the pending trading cycle low runs between December 10th and December 24th. The advance into this trading cycle top has carried price to overbought levels and the price/oscillator picture has ripened nicely for a top. Once a daily swing high is formed and confirmed by a downturn of the daily CTI, the trading cycle top should be in place. A daily swing high will be completed on Friday if 1, is not bettered and if 1, is violated. If a weekly swing high is also formed in conjunction with the downturn into the trading cycle low, then we should also prove to have the intermediate-term cycle top in place as well. Copyright 2018 by Tim Wood 14

13 Our daily chart of the XAU is next. Because of the violation of the October 31st trading cycle low in conjunction with the decline into the November 13th daily swing low, the expectation has been and continues to be for the advance out of the November 13th low to be counter-trend. There was no trade on the XAU Wednesday, but per the parameters given in the Tuesday night update, a daily swing high was completed on Thursday. With the daily CTI still positive, a short-term sell signal was not triggered. Any further weakness on Friday that turns the daily CTI down will trigger a short-term sell signal and the counter-trend top should be in place. Another daily swing low will be completed on Friday if holds and if is bettered. Copyright 2018 by Tim Wood 15

14 Dollar End of Week Intermediate-Term Indicator Summary Intermediate-Term Buy Primary Indicators Formation of a Weekly Swing Low Cycle Turn Indicator (CTI) Confirming Indicators Trend Indicator (TI) Cycle Momentum Indicator Secondary Indicators Stochastic Daily Indicator Summary Short-Term Sell Primary Indicators Formation of a Daily Swing Low Cycle Turn Indicator (CTI) Confirming Indicators Trend Indicator (TI) Cycle Momentum Indicator Secondary Indicators Stochastic The assumption has been and continues to be that the trading cycle low was seen on November 20th. The price action on Tuesday completed the formation of a daily swing high that was confirmed by a downturn of the daily CTI, which triggered a short-term sell signal. But, with price reversing off of the lows, I said in the Tuesday night update that I questioned the sell signal and that we need to see a close below Tuesday s low in order to confirm it. On Wednesday a daily swing low was completed so Tuesday s sell signal wasn t confirmed. On Thursday, the Dollar moved slightly above Wednesday s high and then reversed. As a result, this is sort of the opposite of the situation on Tuesday in that the price/oscillator picture is now suggestive of lower prices and the intermediate-term cycle top is due. Any further weakness on Friday that carries price below Thursday s low will complete the formation of another daily swing high and any further weakness that carries price below Tuesday s low will confirm Tuesday s short-term sell signal, which should serve to confirm the trading cycle top and based on current structure it should in turn also mark the higher degree intermediate-term cycle top. In order to keep the structure of the trading and intermediate-term cycle positive and alive, we must see this trading cycle advance unfold with a right-translated structure that carries price above the November high. A daily swing high will be completed on Friday if is not bettered and if is violated. Copyright 2018 by Tim Wood 16

15 Bonds End of Week Intermediate-Term Indicator Summary Intermediate-Term Buy Primary Indicators Formation of a Weekly Swing Low Cycle Turn Indicator (CTI) Confirming Indicators Trend Indicator (TI) Cycle Momentum Indicator Secondary Indicators Stochastic Daily Indicator Summary Short-Term Buy Primary Indicators Formation of a Daily Swing Low Cycle Turn Indicator (CTI) Confirming Indicators Trend Indicator (TI) Cycle Momentum Indicator Secondary Short Term Indicators Stochastic The price action on November 29th completed the formation of a daily swing low that was confirmed by an upturn of the daily CTI, which in turn triggered a short-term buy signal and thus far, that buy signal remains intact. Based on the timing band for this low and the accompanying oscillator picture, the November 28th daily swing low should not have ideally marked the trading cycle low, because it fell just a little on the early side of the timing band and the stochastic was not pulled down to oversold levels. However, per the weekend update, until proven otherwise, the assumption will continue to be that an early trading cycle low was seen. In the event we see the completion of another daily swing high and downturn of the daily CTI in the next week or so, then we will at that time examine the evidence with regard to the trading cycle low occurring later within the timing band rather than having occurred early. Regardless of this phasing, we continue to have a short and intermediateterm buy signal in place. Copyright 2018 by Tim Wood 17

16 Crude Oil At a higher level, the seasonal and 3-year cycle tops are in place and it is for this reason the advance in association with the November 27th short-term buy signal was expected to be counter-trend. Per the parameters given in the Tuesday night update, a daily swing high was completed on Wednesday and more weakness followed on Thursday. As a result of this daily swing high and short-term sell signal, the assumption is that that counter-trend advance has run its course. This sell signal will now remain intact until another daily swing low and upturn of the daily CTI is seen. A daily swing low will be completed on Friday if holds and if is bettered Cycles News & Views; All Rights Reserved timwood1@cyclesman.com Copyright 2018 by Tim Wood 18

17 Copyright 2018 by Tim Wood 19