Cycle Turn Indicator Direction and Swing Summary. of Select Markets as of the close on. December 20, Daily CTI. Swing

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1 Cycle Turn Indicator Direction and Swing Summary of Select Markets as of the close on December 20, 2018 Market Daily CTI Daily Swing Weekly CTI Weekly Swing Industrial Negative High Negative High Transports Negative High Negative High NDX Negative High Negative High S&P Inverse Fund Positive N/A * Positive Low CRB Index Negative High Negative High Gold Positive Low Positive Low XAU Negative Low Positive Low Dollar Negative High Negative High Bonds Positive Low Positive Low Crude Oil Negative High Negative High Unleaded Negative High Negative High Natural Gas Positive Low Negative High *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 Sell Formation of a Weekly Swing High CTI on Rydex Tempest Fund * Advance/Decline Issues Diff New High New Low Diff Secondary Indicators Stochastic Cycle Momentum Indicator *When this indictor is it is negative for the market and visa versa. December 20, 2018 Daily Indicator Summary Short-Term Sell Formation of a Daily Swing High Slow New High/New Low Differential 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 The timing band for the pending trading cycle low in Equities runs between December 7th and December 27th. The short-term sell signal and decline into this low remains intact and we continue sitting in the middle portion of the timing band for this low. I have no indication this low has been seen, but I am sensing it and in the event this low wasn t seen on Thursday, I think it is close. Another push down with a reversal off the lows would be perfect, but whatever form it comes in, ultimately the completion of a daily swing low is needed as structural evidence of this low. Until such time, lower prices cannot be ruled out. Once this trading cycle low is seen, we are going to have to see what the next trading cycle advance yields in order to confirm the phasing of the intermediate-term cycle, but until proven otherwise the assumption continues to be that the intermediate-term cycle low was seen in October, that the advance out of the pending trading cycle low will be counter-trend and that it will be followed by further weakness in association with the decline out of the higher degree cycle tops and into the next intermediate-term and seasonal cycle low. The Copyright 2018 by Tim Wood 5

4 now due trading cycle low continues to be our primary focus at this juncture and once a daily swing low and upturn of the Primary Short-Term Indicators is seen, this low should be in place. Gold completed the formation of another daily swing low on Monday and the XAU triggered another shortterm buy signal. Those buy signals remain intact, but we need to be on guard for a left-translated trading cycle top. The short and intermediate-term sell signal in Crude Oil remains intact as the downturn out of the higher degree cycle tops continue to pressure commodities and the energy sector. The sell signals on the CRB Index also remain in force and the downturn out of the higher degree cycle tops have carried it to 17 month lows. The Dollar continues to weaken in association with the decline into the trading cycle low and with the price action this week also setting a weekly swing high into motion the suspected intermediate-term cycle top should also be in place. The short-term buy signal in Bonds remains intact, but Bonds are now at risk of a left-translated trading cycle top, which if this materializes will be suggestive of the counter-trend/ intermediate-term cycle top as well. The first chart below shows our distribution indicator. The red intermediate-term Advancing issues line is tied to the intermediate-term cycle, which has turned back down. The crossing of the green MA line, above the black MA line, continues to be suggestive of the October low having marked the intermediate-term cycle low. The crossing of the red line below the two MA lines is now suggestive of what is suspected to be a failed intermediate-term cycle top. Copyright 2018 by Tim Wood 6

5 The Trading Cycle Oscillator in the upper window remains below its trigger line. The Momentum indicator remains below its zero line. The stochastic in the middle window is trying to turn back up and continues trying to form a divergence, which is hinting of the trading cycle low. The first of our Primary Short-Term Indicators is the New High/New Low Differential, plotted with price, which has turned back down. The Trend Indicator remains below its trigger line. Copyright 2018 by Tim Wood 7

6 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. The ongoing short-term sell signal remains intact, but the trading cycle low is due and once a daily swing low is confirmed by an upturn of ALL Three of the Primary Short-Term Indicators, a buy signal will be triggered and the trading cycle low should then be confirmed. Until then, the ongoing sell signal will stand and lower prices will remain possible. Copyright 2018 by Tim Wood 8

7 Both the Intermediate Term Breadth Momentum Oscillator and the Intermediate Term Volume Momentum Oscillator remain below their trigger lines. Copyright 2018 by Tim Wood 9

8 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 remain negative. Given the cyclical structure, I explained that the downturn of the Ratio Adjusted McClellan Oscillator, from below its zero line, left the market in a risky position, which has proven correct. The decline that has followed has carried this indicator to oversold levels, but it is still not as oversold as it was in early October or at the February low. Upon the completion of a daily swing low and upturn above the trigger line, the now due trading cycle low should be in place. Copyright 2018 by Tim Wood 10

9 Next is the Smoothed McClellan Oscillator, which remains below its trigger line. Copyright 2018 by Tim Wood 11

10 The Accumulation/Distribution Index remains negative and is now sitting at the most short-term oversold levels since January Because of the different cyclical structure and environment, this is not to say that we are at such a meaningfully low. But, it is certainly suggestive of the now due/pending trading cycle low. In Summary, the higher degree setup continues to be suggestive of the 4-year cycle top and for this reason the longer-term risk continues to be high. Short-term, the trading cycle low is due and should be confirmed once a short-term buy signal is triggered. The advance out of this trading cycle low is expected to be counter-trend and followed by another trading cycle down into the next intermediate-term and seasonal cycle low. Copyright 2018 by Tim Wood 12

11 Gold End of Week Intermediate-Term Indicator Summary Intermediate-Term Buy Daily Indicator Summary Short-Term Neutral Formation of a Weekly Swing Low Cycle Momentum Indicator Secondary Indicators Stochastic Formation of a Daily Swing Low Cycle Momentum Indicator Secondary Short Term Indicators Stochastic The timing band for the now due trading cycle low runs between December 10th and December 24th. This low was seen on December 14th and the advance out of that low remains intact. It has already carried price to overbought levels and based on the price action of the XAU, we need to be on guard for the completion of a left-translated trading cycle top, which would be suggestive of the counter-trend top in association with the advance out of the August lows. Therefore, the structural developments in association with this trading cycle advance are extremely important. In the meantime, this short-term buy signal will remain intact until a daily swing high and downturn of the daily CTI is seen. A daily swing high will be completed on Friday if 1, is not bettered and if 1, is violated. Copyright 2018 by Tim Wood 13

12 Our daily chart of the XAU is next and the price/oscillator picture continues to be ripe for the trading cycle top. On Wednesday the XAU reversed hard off of its highs and the daily CTI turned back down. This, along with the downturn of the stochastic continues to make for a ripe oscillator picture in association with what should be a trading cycle top. Thursday was an inside day, so it yielded no changes. Any further decline on Friday that completes the formation of a daily swing high will trigger a short-term sell signal. Until a swing high and joint downturn of the CTI is seen, the short-term buy signal will stand. More on all of this as it develops. Copyright 2018 by Tim Wood 14

13 Dollar End of Week Intermediate-Term Indicator Summary Intermediate-Term Buy Formation of a Weekly Swing Low Cycle Momentum Indicator Secondary Indicators Stochastic Daily Indicator Summary Short-Term Sell Formation of a Daily Swing High Cycle Momentum Indicator Secondary Indicators Stochastic The trading cycle low was last seen on November 20th and the timing band for the pending trading cycle low runs between December 14th and December 28th. Based on the approaching timing band and the divergent oscillator picture, we knew as we closed the week last week that conditions were ripe for the trading cycle top. On Tuesday a daily swing high was completed and confirmed by a downturn of the daily CTI, plotted with price, which marked the trading cycle top. The gap you see on the chart is due to contract rollover. That aside, it is accurate and the decline into the trading cycle low is at hand. This short-term sell signal will remain intact until another daily swing low and upturn of the daily CTI is seen. We have also known that the intermediate-term cycle top was due and the price action this week suggests that it too, is in place. This short-term sell signal will remain intact until a daily swing low and upturn of the daily CTI is seen, which should then mark the trading cycle low. A daily swing low will be completed on Friday if holds and if is bettered. Copyright 2018 by Tim Wood 15

14 Bonds End of Week Intermediate-Term Indicator Summary Intermediate-Term Buy Formation of a Weekly Swing Low Cycle Momentum Indicator Secondary Indicators Stochastic Daily Indicator Summary Short-Term Buy Formation of a Daily Swing Low Cycle Momentum Indicator Secondary Short Term Indicators Stochastic The timing band for the trading cycle low runs between November 29th and December 20th. Every indication is that this low was seen on December 13th. The advance out of that low carried price to slightly overbought levels and on Thursday we saw a broad reversal day, which is indicative of a top. If we see a trading cycle top this early in the trading cycle, it is going to give us a left-translated trading cycle top, which will be suggestive of the higher degree intermediate-term top, which should cap the counter-trend advance out of the October low. Therefore, in order to keep this trading and in turn, the intermediate-term countertrend advance alive, this trading cycle must move higher in conjunction with a right-translated structure. Copyright 2018 by Tim Wood 16

15 Crude Oil The short and intermediate-term sell signal remains intact and has again carried price to oversold levels, per the stochastic. Therefore, another attempt at a bounce is nearing, but ideally we should see some divergences form first. With the advance out of the November low also having triggered an intermediateterm buy signal, the assumption is that we have seen an intermediate-term failure and at a higher level this continued weakness is in association with the decline into the seasonal and 3-year cycle low. For this reason, any bounce is expected to be counter-trend. With all of that said, until a daily swing low is formed and confirmed by an upturn of the daily CTI, this short-term sell signal will remain intact and lower prices will remain possible. The first step toward a bounce taking hold is the formation of a daily swing low, which will occur on Friday if holds and if is bettered Cycles News & Views; All Rights Reserved timwood1@cyclesman.com Copyright 2018 by Tim Wood 17