Cycle Turn Indicator Direction and Swing Summary. of Select Markets as of the close on. December 21, Daily CTI. Swing

Transcription

1 Cycle Turn Indicator Direction and Swing Summary of Select Markets as of the close on December 21, 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 Low 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 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 23, 2018 Daily Indicator Summary Short-Term Sell 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 The timing band for the pending trading cycle low in Equities runs between December 7th and December 27th. I have been asked if the December 10th daily swing low could have marked the trading cycle low. With that swing low having occurred within the timing band for this low, yes that is possible. However, with the advance out of that low lasting less than two days and in the absence of a short-term buy signal I have given the market the benefit of the doubt in that it is pressing further into the timing band in association with this trading cycle low. I still tend to think this is the case, but should this weakness continue past the coming week, it could well prove that the low did occur on December 10th. If that is the case, then we have an even more dire setup than I imagined in that this would give us a left-translated trading cycle top in only 2 days with a trading cycle low not due for at least another 3 weeks or so. The price action this next week should serve to clarify the phasing of this trading cycle and in giving Equities the benefit of the doubt, the expectation is to see the trading cycle low this next week, a bounce for a weeks or so and then another trading cycle down into the next trading and intermediate-term cycle low in February. Either way, the risk with Copyright 2018 by Tim Wood 5

4 Equities remains high and the bottom line is that the short-term sell signal and decline will remain intact until a daily swing low and upturn of the Primary Short-Term Indictors are seen. The short-term buy signal in Gold and the XAU remain intact, but they also continue to be at risk of what currently has the feel of a left-translated trading cycle possibly trying to take hold. If this should prove to be the case, then it should also mark the counter-trend intermediate-term cycle top. The short and intermediate-term sell signal in Crude Oil remains intact as it continues to slide in association with the decline out of the higher degree cycle tops. The sell signals on the CRB Index also remain in force 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 Friday and should be at or near the trading cycle low. That said, every indication is that we also have the intermediate-term cycle top in place, so the expectation is for the advance out of the trading cycle low to be counter-trend with respect to the intermediate-term cycle top. The shortterm buy signal in Bonds remains intact, but Bonds are 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. Big Picture, the NYSE, which has been one of our top out leaders, has now reversed well over 50% of its gain from the year cycle low. The Transports are down well over 50% as well and the AMEX is nearing its 61.8% retracement level. The Industrials are now beginning to follow suit and as explained in the update last weekend, a Dow Theory Primary Trend Change was seen on December 14th. Yet, there still seems to be no concern in the market. 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 moved below its October low. In doing so, this is another indication of the October low having marked the intermediate-term cycle low. The crossing of the green MA line, above the black MA line, was suggestive of the October low having marked the intermediate-term cycle low and a crossing back below the black line will serve as additional evidence of what appears to be a failed and lefttranslated intermediate-term cycle top. Copyright 2018 by Tim Wood 7

6 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 has ticked back down, but is thus far still trying to form a divergence with what should ideally be a pending 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 up and which is also suggestive of what should be a pending trading cycle low. The Trend Indicator remains below its trigger line. The timing band for this low runs through December 27th, per the red timing band, noted just below price in the chart below. If we don t see the trading cycle low this next week, we have an even more bearish setup unfolding than I thought. 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 trading cycle low should be at hand, but the ongoing short-term sell signal remains intact and will continue to do so until a daily swing low is confirmed by an upturn of ALL Three of the Primary Short-Term Indicators. Copyright 2018 by Tim Wood 9

8 Both the Intermediate Term Breadth Momentum Oscillator and the Intermediate Term Volume Momentum Oscillator remain below their 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 obviously remains negative and at oversold levels. Interesting to note that in spite of the weakness we have seen, the Ratio Adjusted McClellan Oscillator has not yet moved to the levels seen back in February. Therefore, we could obviously see further weakness before a bounce is seen, but this is getting a bit stretched. Ultimately, I think we probably have a bounce and another trading cycle down into the intermediate-term and seasonal cycle low. Copyright 2018 by Tim Wood 11

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

11 The Accumulation/Distribution Index remains negative and is now sitting at the most short-term oversold levels since August This extreme reading is also suggestive of a bounce out of what should be the now due/pending trading cycle low. But, until a daily swing low is formed and short-term buy signal is triggered, we cannot rule out continued weakness before a bounce takes hold. Copyright 2018 by Tim Wood 13

12 Our weekly chart of the Industrials is next. The price action this past week carried the Industrials below the February and April lows. As a result, we now have structural confirmation of the suspected seasonal cycle top, which in the case of the Industrials peaked in 6 months, which puts that DNA Marker in place. We have slowly seen the evidence with regard to the 4-year cycle top in the leading indexes, averages and sectors. I have explained that the Industrials and S&P have been the hold out, but that because of the collective weight of the evidence we should have the 4-year cycle top in place on them as well. As a result of the price action this week, we now have structural evidence that suggests the Industrials and the S&P have joined the top-out list and that the 4-year cycle has in fact been seen. The timing band for the intermediate-term cycle low ran between October 17th and December 19th. With price now having declined beyond this timing band, the evidence is increasingly suggestive of the October low having marked the intermediate-term cycle low and that we have the suspected failed and left-translated intermediate-term cycle at play. Consequently, the evidence suggests that the bounce out of the pending trading cycle low should not be in association with a nesting of the intermediate-term cycle low, which in turn suggests that we should see a lesser bounce in association with the pending trading cycle low, per something more in line with the light blue scenario depicted on the weekly chart below. The decline into the next intermediate-term cycle low should coincide with the higher degree seasonal cycle low. I have more information on this that I will be discussing once the next trading cycle down begins. In summary, the risk remains high. The higher degree setup with regard to the 4-year cycle top has continued to fall into place. On December 14th it evolved to the point in which we have now seen a Dow Theory Primary Trend Change and we have also finally seen structural confirmation on the Industrials of the suspected 4-year cycle top. Therefore, our expectation with regard to the overall higher degree setup is now beginning to prove itself. 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 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 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. But, this advance has already carried price to overbought levels and as reported here Thursday night, based on the price action of the XAU, we need to be on guard for the completion of a left-translated trading cycle top. The price action on Friday was an inside day and Gold continues to be at risk 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 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. Both Thursday and Friday were inside days with respect to Wednesday s price bar and the price/oscillator picture continues to be ripe for the trading cycle top. Any further decline on Monday that completes the formation of a daily swing high will trigger a short-term sell signal. Bottom line, 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 remains intact, 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 now moving into the timing band for this low, the price /oscillator picture is ripe for the intermediateterm cycle top. If we see the completion of a left-translated trading cycle top and the completion of a weekly swing high in association with this trading cycle, 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 Our weekly chart of the XAU is next and as with Gold, the intermediate-term buy signal also remains intact. But, also as with Gold, this intermediate-term advance should be a counter-trend advance. Once a weekly swing high and downturn of the weekly CTI is seen, an intermediate-term sell signal will be triggered and this top should be in place. A weekly swing high will be completed in the coming week if is not bettered and if is violated. Copyright 2018 by Tim Wood 18

17 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 Neutral Primary Indicators Formation of a Daily Swing Low Cycle Turn Indicator (CTI) Confirming Indicators Trend Indicator (TI) Cycle Momentum Indicator Secondary Indicators Stochastic The timing band for the now due trading cycle low runs between December 14th and December 28th. The price action on Friday completed the formation of a daily swing low, which suggests that we may have seen the trading cycle low on Thursday. Ideally I would like to see the oscillators pulled a little lower, but once a daily swing low AND upturn of the daily CTI is seen, a short-term buy signal will be triggered and this low should be in place. Based on the cyclical phasing of the intermediate-term cycle, 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. If we see anything different in conjunction with the pending trading cycles advance, then something else is going on. Any further decline from here should be an ending move into the trading cycle low and any further advance that turns the daily CTI up will trigger a short-term buy signal in association with what should be the trading cycle low. Copyright 2018 by Tim Wood 19

18 Next is our weekly chart of the Dollar. You should all be aware that there have been some questions with regard to the phasing of the intermediate-term cycle. In spite of those questions, we have known that conditions have been ripe for the intermediate-term cycle top, which we have been anticipating. Per the parameters given here in last weekend s update, we saw the completion of a weekly swing high this past week that was confirmed by a downturn of the weekly CTI, which triggered an intermediate-term sell signal in association with what should be the intermediate-term cycle top. Based on the September low having marked the intermediate-term cycle low, the timing band for the next intermediate-term cycle low runs between January 11th and March 1st. Also based on this phasing, there should ideally be at least one more trading cycle down into this low. With the higher degree 4-year cycle low in place and based on the structure of the current seasonal cycle advance, the decline out of this intermediate-term cycle top should be counter-trend and should ultimately be followed by further strength. For now, this 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 20

19 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 timing band for the trading cycle low runs between November 29th and December 20th. The evidence continues to point toward this low having occurred 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 and Friday was an inside day, so there were no changes. As we currently sit, Bonds are at danger of a lefttranslated trading cycle top, which if seen 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 cycle and in turn the intermediate-term counter-trend advance alive, this trading cycle must move higher in conjunction with a right-translated structure. Copyright 2018 by Tim Wood 21

20 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. Bottom line, 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 22

21 Crude Oil No change with Crude Oil. The short and intermediate-term sell signal remains intact and the weakness continues. Price remains at oversold levels, per the stochastic, which makes conditions ripe for a bounce. Ideally, we should see some oscillator divergences form first, but once a daily swing low and upturn of the daily CTI is seen, we should have a short-term low in place. With the advance out of the November low also having triggered an intermediate-term 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. The first step toward a bounce taking hold is the formation of a daily swing low, which will occur on Monday if holds and if is bettered. Copyright 2018 by Tim Wood 23

22 Next is our weekly chart of Crude Oil. The advance out of the November 30th weekly swing low appeared to have been an intermediate-term cycle low, which has now failed. I pointed out here last week that the advance was running into resistance at the bottom side of the 23.6% retracement line and it is interesting to see how that level halted the advance. At a higher level, the decline out of the seasonal and 3-year cycle top remain intact and the assumption is that we have a failed and left-translated intermediate-term cycle at play. 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 24