Cycle Turn Indicator Direction and Swing Summary. of Select Markets as of the close on. December 28, Daily CTI. Swing

Transcription

1 Cycle Turn Indicator Direction and Swing Summary of Select Markets as of the close on December 28, 2018 Market Daily CTI Daily Swing Weekly CTI Weekly Swing Industrial Positive Low Negative High Transports Positive Low Negative High NDX Positive Low Negative High S&P Inverse Fund Negative N/A * Positive Low CRB Index Positive Low Negative High Gold Positive Low Positive Low XAU Positive Low Positive Low Dollar Negative High Negative High Bonds Negative Low Positive Low Crude Oil Positive Low Negative High Unleaded Positive Low Negative High Natural Gas Negative High 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 Primary Indicators Formation of a Weekly Swing High 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 Stochastic Cycle Momentum Indicator *When this indictor is it is negative for the market and visa versa. December 30, 2018 Daily Indicator Summary Short-Term Buy/Neutral Primary Indicators Formation of a Daily Swing Low 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 The timing band for the trading cycle low in Equities ran between December 7th and December 27th. This low was seen on December 26th and the short-term buy signal in association with that low remains intact. Based on the timing of this low and that of the intermediate-term cycle low, the expectation is for the advance out of this trading cycle low to be counter-trend and for it to be followed by another trading cycle down into the next trading and what should then be the intermediate-term cycle low. This expectation has been depicted in the last two weekend updates, per the light blue scenario in the weekly section below. Please refer to the current weekly chart below. Short-term, our focus is on this trading cycle advance and the identification of its top in association with the setup for the decline into the clustering of higher degree cycle lows, which are due in conjunction with the next trading cycle low. I ll cover that more in the January research letter, which will be out next weekend. Longer-term, with the Dow Theory Primary Trend Change and 4-year cycle top in place, the risk to the Equity market is high. Copyright 2018 by Tim Wood 5

4 The short-term buy signal in Gold and the XAU continues to hold, so there have been no changes here. But, this does not change the fact that the intermediate-term cycle top is due and that this should ideally be the last trading cycle up into that top. If a weekly swing high and intermediate-term sell signal is seen in conjunction with the downturn out of the trading cycle top, then we will at that time have evidence of the intermediate-term cycle top. If not, then we likely have not seen the intermediate-term cycle top and this cycle will probably be stretching for another trading cycle. As with Equities, the advance out of the trading cycle low in Crude Oil remains intact, but as with Equities it should ideally also prove to be counter-trend. The short-term buy signal on the CRB Index also remains intact, but here too, this should be a counter-trend advance that is followed by further weakness in association with the decline out of the higher degree seasonal and 3-year cycle tops. The Dollar completed the formation of a daily swing low on December 21st and every indication is that it marked the trading cycle low. On Friday the Dollar triggered another short-term sell signal and as a result it remains at risk of a left-translated trading cycle top in association with what should be the intermediate-term cycle top and decline into the intermediate-term cycle low. The short-term buy signal in Bonds remains intact, but Bonds also remain at risk of a left-translated trading cycle top, which would be suggestive of the counter-trend/intermediate-term cycle top as well. Copyright 2018 by Tim Wood 6

5 Below is our distribution indicator. The red intermediate-term Advancing issues line is tied to the intermediate-term cycle, which has ticked back down after recently violating the October low. As a result of the violation of the October low, this is another indication of the October low having marked the intermediate-term cycle low. The green MA line is now sitting right on the black MA line. The behavior here is also suggestive of the October low having marked the intermediate-term cycle low and what appears to be a failed and left-translated intermediate-term cycle. Copyright 2018 by Tim Wood 7

6 The Trading Cycle Oscillator in the upper window remains positive. The Momentum indicator has also turned above its zero line, which serves to further confirm the trading cycle low. The stochastic in the middle window remains positive in association with the advance out of the trading cycle low as well. The first of our Primary Short-Term Indicators is the New High/New Low Differential, plotted with price, which remains positive. The Trend Indicator remains below 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. Bottom line, the anticipated bounce out of the trading cycle low remains intact and will continue to do so until another daily swing high and downturn of ALL Three of the Primary Short-Term Indicators is seen. Once a daily swing high and the trading cycle top is in place, Equities will be positioned for another trading cycle down into the higher degree clustering of lows, which should be of at least intermediate-term degree. Copyright 2018 by Tim Wood 9

8 The Intermediate Term Breadth Momentum Oscillator remains slightly below its trigger line while the Intermediate Term Volume Momentum Oscillator has turned slightly above its trigger lines. 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 remain negative. The Ratio Adjusted McClellan Oscillator is now approaching it zero line. Ideally, I would like to see this advance pull it up to the range in conjunction with the advance into the trading cycle top. Regardless, once another short-term sell signal and crossing below the trigger line is seen, the trading cycle top should be in place. The price/oscillator behavior here is going to be important. Copyright 2018 by Tim Wood 11

10 Next is the Smoothed McClellan Oscillator, which remains below its trigger line, but the upturn is reflective of the trading cycle low. Copyright 2018 by Tim Wood 12

11 The Accumulation/Distribution Index remains above its trigger line and continues moving higher in association with the advance out of the trading cycle low. Here too, I would still like to see this indicator move higher and then once it turns back down we should be at or near the trading cycle top. Copyright 2018 by Tim Wood 13

12 Our weekly chart of the Industrials is next. For the last several weeks I have explained that we were moving into the trading cycle low and possibly the intermediate-term cycle low. I have shown these two scenarios in the weekly chart with the light and dark blue lines. The timing band for the intermediate-term cycle low ran between October 17th and December 19th and with price having moved beyond that timing band in association with the decline into the trading cycle low, I explained here last week that the evidence was increasingly suggestive of the October low having marked the intermediate-term cycle low. Consequently, this suggests that we have more than likely seen the suspected failed and left-translated intermediate-term cycle come into play, which further suggests that the advance out of this trading cycle low should be a lesser degree counter-trend move, which is approximated by the light blue line. So, based on the statistical expectations with regard to the intermediate-term cycle, until we see evidence to the contrary, we will continue to operate under the assumption that something akin to the light blue scenario is at play. In summary, the trading cycle low is in place, but it should be counter-trend and there should be at least one more trading cycle down into the higher degree intermediate-term cycle low. On December 14th a Dow Theory Primary Trend Change was seen and every indication is that we have the 4-year cycle top in place and that the decline into the 4-year cycle low is under way. While we have a short-term bounce at hand, as a result of the higher degree setup, the risk remains high. Copyright 2018 by Tim Wood 14

13 Gold End of Week Intermediate-Term Indicator Summary Intermediate-Term Buy Daily Indicator Summary Short-Term Neutral Primary Indicators Formation of a Weekly Swing Low 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 trading cycle last bottomed on December 14th and the advance out of that low remains intact. The timing band for the next trading cycle low runs between January 11th and January 25th. Price was up marginally on Friday, which yielded no new developments in that the oscillator picture remains at overbought levels, which continues to make conditions ripe for a top. But, until a daily swing high and downturn of the daily CTI is seen, the short-term buy signal will stand and higher prices will remain possible. Overall, the advance out of the August low is expected to be counter-trend and we should be approaching the intermediate-term cycle top with this trading cycle advance. Therefore, the pending intermediate-term top will be an opportunity to cap the counter-trend advance out of the August low. However, the first step is the triggering of a sell signal in association with a trading cycle top and the completion of a weekly swing high in association with the decline into the trading cycle low. 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 Monday if 1, is not bettered and if 1, is violated. Copyright 2018 by Tim Wood 15

14 Our daily chart of the XAU is next and while the short-term buy signal continues to hold, the price/oscillator picture continues to be heavy. The expectation has been and continues to be that the advance out of the September low is a counter-trend bounce of intermediate-term degree. In the meantime, as with Gold, the short and intermediate-term buy signals stand. Also as with Gold, the XAU should be nearing the trading cycle top, if that top wasn t seen in conjunction with the December 19th high. Once the trading cycle top is confirmed with the triggering of a short-term sell signal, the opportunity to cap the intermediate-term advance will be at hand. If the decline into the trading cycle low completes the formation of a weekly swing high, then upon such development we will have evidence that the counter-trend top is trying to take hold. For now, until a swing high and joint downturn of the CTI is seen, the short-term buy signal will stand. Copyright 2018 by Tim Wood 16

15 Next is our weekly chart of Gold. The intermediate-term advance out of the August low continues pressing higher, but based on the higher degree cyclical phasing, this should still prove to be a counter-trend advance. The timing band for the next intermediate-term cycle low runs between December 7th and January 25th. With price well within this timing band for this low, and in light of the overbought oscillator picture, the price /oscillator picture continues to ripen for the intermediate-term cycle top. If we see the completion of a a weekly swing high in association with the decline out of the pending trading cycle top, then we should prove to have the intermediate-term cycle top in place. Otherwise, higher prices in association with the intermediate-term counter-trend advance will remain possible. A weekly swing high will be completed in the coming week if 1, is not bettered and if 1, is violated. Copyright 2018 by Tim Wood 17

16 Dollar End of Week Intermediate-Term Indicator Summary Intermediate-Term Sell Primary Indicators Formation of a Weekly Swing High 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 High Cycle Turn Indicator (CTI) Confirming Indicators Trend Indicator (TI) Cycle Momentum Indicator Secondary Indicators Stochastic The timing band for the current trading cycle low ran between December 14th and December 28th and the evidence continues to point toward that low having occurred on December 20th. We have also known that the higher degree intermediate-term cycle top is due, which in turn suggests that the advance out of this trading cycle low should be counter-trend and should be followed by at least one more trading cycle down into the intermediate-term cycle low. On Thursday price completed the formation of a daily swing high, which put this trading cycle advance at risk of having run its course. Now, with the downturn of the daily CTI on Friday, a short-term sell signal was triggered and the risk of such setup continues to mount. So, until we see evidence to the contrary, the assumption is that this is a left-translated trading cycle top in association with the decline into the higher degree intermediate-term cycle low. In order to begin to negate this setup, we must first see the triggering of another daily short-term buy signal and bettering of the December 26th daily swing high. Also, should we see the completion of another daily swing low and the triggering of another shortterm buy signal, prior to a violation of the December 20th daily swing low, then we may have a basis to reexamine the evidence with regard to what should ideally be a lefttranslated trading cycle top. Copyright 2018 by Tim Wood 18

17 Our weekly Dollar chart is next. Again, I remind you that there have been some uncertainties with regard to the phasing of the intermediate-term cycle. But, as previously explained, the assumption is that it last bottomed the week of September 21st and the timing band for the next intermediate-term cycle low runs between January 11th and March 1st. Based on this phasing and the current oscillator picture, we should ideally have at least one more trading cycle down into the intermediate-term cycle low. Also, because of this cyclical phasing and the current price/oscillator picture, the expectation is for the advance out of the current trading cycle to peak with a left-translated structure, which it is seemingly now trying to do. In the meantime, the intermediate-term cycle decline will remain intact until another weekly swing low and upturn of the weekly CTI is seen. A weekly swing low will be completed in the coming week if holds and if is bettered. Copyright 2018 by Tim Wood 19

18 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 With Friday being an inside day, there were no changes. The last trading cycle low occurred on December 13th and the advance out of that low remains intact. But, the oscillator picture continues to weaken and as a result Bonds remain at risk of a left-translated trading cycle top. In order to prevent a left-translated trading cycle top from taking hold we simply have to see higher prices above the December 16th high, which ideally needs to carry price well into this next week. Otherwise, any further weakness that triggers a shortterm sell signal will be suggestive of a left-translated trading cycle top, which will in turn be suggestive of the intermediate-term cycle top. For now, the short-term buy signal continues to hold, but with the daily CTI negative, a move below the December 26th low without first bettering the December 26th high will complete the formation of a daily swing high, which will trigger a short-term sell signal. Copyright 2018 by Tim Wood 20

19 Next is our weekly chart of Bonds. The intermediate-term cycle low bottomed on October 9th and the advance out of that low remains intact. This advance has also carried price to overbought levels, per the stochastic, which has begun to roll over. Because of the evidence with regard to the higher degree failed and left-translated seasonal and 3-year cycle top, the expectation is for this intermediate-term advance to be counter-trend. However, ideally, I would not expect to see it peak this soon. But, if we see a left-translated trading cycle top take hold here, then it is going to be further suggestive of the intermediate-term cycle top as well. Therefore, the structure of the current trading cycle is key. This advance will remain intact and higher prices will remain possible until a weekly swing high and downturn of the weekly CTI is seen and/or we see a failed and/or left-translated trading cycle top. Copyright 2018 by Tim Wood 21

20 Crude Oil Wednesday s short-term buy signal remains intact, but so far it still hasn t made much progress since the signal was triggered. With the advance out of the November low appearing to be a failed intermediate-term cycle advance, the expectation is that this short-term buy signal will be a counter-trend move, which appears to already be struggling. Once a daily swing high is formed and confirmed by a downturn of the daily CTI, this counter-trend top should be in place. A daily swing high will be completed on Monday if is not bettered and if is violated. Copyright 2018 by Tim Wood 22

21 Next is our weekly chart of Crude Oil. There was no change at this level this past week. Again, the advance out of the November 30th weekly swing low appears to have been an intermediate-term cycle low, which has now failed. After initially moving lower this past week, the short-term bounce is also now at risk of failing. At a higher level, the decline out of the seasonal and 3-year cycle top remain intact and every indication is that we have a failed and left-translated intermediate-term cycle at play, which is suggestive of lower prices into at lease the next intermediate-term cycle low before a more meaningful bounce takes hold. This intermediate-term sell signal will remain intact until a weekly swing low and upturn of the weekly CTI is seen. A weekly swing low will be completed in the coming week if holds and if is bettered Cycles News & Views; All Rights Reserved timwood1@cyclesman.com Copyright 2018 by Tim Wood 23