Cycle Turn Indicator Direction and Swing Summary. of Select Markets as of the close on. January 3, Daily CTI. Swing

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1 Cycle Turn Indicator Direction and Swing Summary of Select Markets as of the close on January 3, 2019 Market Daily CTI Daily Swing Weekly CTI Weekly Swing Industrial Neutral High Negative Low Transports Neutral High Negative High NDX Positive Low Negative Low S&P Inverse Fund Positive N/A * Positive Low CRB Index Positive High Negative High Gold Positive Low Positive Low XAU Positive Low Positive Low Dollar Positive High Negative High Bonds Positive Low Positive Low Crude Oil Positive Low Positive Low Unleaded Positive Low Positive Low 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 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. January 3, 2019 Daily Indicator Summary Short-Term Neutral 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 January Research Letter will be posted sometime Sunday afternoon. The trading cycle low last bottomed on December 26th. The expectation is that the advance out of this low will be counter-trend, which will then be followed by lower prices into a nesting of higher degree cycle lows. The price action on Thursday completed the formation of a daily swing high, which may have marked the counter-trend top, but with two of the Primary Short-Term Indicators still positive, a short-term sell signal was not triggered. Any further weakness on Friday that turns these remaining two indicators down will trigger a short-term sell signal, which would be suggestive to the trading cycle top, whereas any further advance on Friday should be a retest and/or final probe up into the trading cycle top. Longer-term, as a result of the Dow Theory Primary Trend Change and 4-year cycle top, the risk to the Equity market remains high. Shorterterm, it is a matter of the path we take to get there. Copyright 2018 by Tim Wood 5

4 The short and intermediate-term buy signal in Gold remains intact. The XAU triggered a short-term sell signal on Monday, but another short-term buy signal was re-triggered on Wednesday. The intermediateterm buy signals in association with the advance out of the higher degree cycle lows remain intact and until sell signals are triggered at that level, the intermediate degree counter-trend advance will remain intact. The trading cycle advance in Crude Oil also remains intact. 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 into the intermediate and higher degree cycle lows. The Dollar completed the formation of a daily swing low on December 21st and every indication is that it marked the trading cycle low. As a result of the December 28th short-term sell signal and violation of the December 20th low, the evidence suggests that we have a failed and left-translated trading cycle in association with the decline into the intermediate-term cycle low. The shortterm buy signal in Bonds remains intact and the risk of the left-translated trading cycle top has finally been corrected. Below is our distribution indicator. The red intermediate-term Advancing issues line is tied to the intermediate-term cycle, which continues turning back up after having violated 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 has moved solidly below the black MA line, which is suggestive of what appears to be a failed and left-translated intermediate-term cycle. Copyright 2018 by Tim Wood 6

5 The Trading Cycle Oscillator in the upper window remains positive, but is trying to roll over. The Momentum indicator also remains above its zero line, but is also now trying to roll over. The stochastic in the middle window has turned down from overbought levels, which is suggestive of the trading cycle top. The first of our Primary Short-Term Indicators is the New High/New Low Differential, plotted with price, which remains positive. The Trend Indicator has turned back down after retesting 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. We now have a daily swing high in place, which is suggestive of the counter-trend top. However, the bounce out of the trading cycle low will remain intact until a daily swing high AND downturn of ALL Three of the Primary Short-Term Indicators is seen. Once this occurs, Equities will be positioned for another trading cycle down into the higher degree clustering of lows. Copyright 2018 by Tim Wood 8

7 Both the Intermediate Term Breadth Momentum Oscillator and the Intermediate Term Volume Momentum Oscillator remain above their trigger lines in association with the advance out of the trading cycle low. 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 also remain positive in association with their upturn out of the trading cycle low. I said that I would like to see the Ratio Adjusted McClellan Oscillator move back up to the range, which it has. Now, once another short-term sell signal and crossing below the trigger line is seen, the trading cycle top should be confirmed. Copyright 2018 by Tim Wood 10

9 Next is the Smoothed McClellan Oscillator, which has also turned up above its trigger line in association with the upturn out of the trading cycle low. Copyright 2018 by Tim Wood 11

10 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, a downturn, will be suggestive of the trading cycle top. 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. Thursday s completion of a daily swing high is indicative of this counter-trend top, but until a daily swing high and down turn of ALL Three of the Primary Short-Term Indicators are seen, we cannot rule out additional strength. 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, which consequently means that the decline into the 4-year cycle low is under way. Once another short-term sell signal is triggered, Equities will be re-positioned for the resumption of the decline into the higher degree cycle lows. The risk remains high. Copyright 2018 by Tim Wood 12

11 Gold End of Week Intermediate-Term Indicator Summary Intermediate-Term Buy Daily Indicator Summary Short-Term Buy 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 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. With this timing band now approaching and in light of the of the oscillator picture, the trading cycle top should be near. However, 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 countertrend and we should be approaching the intermediate-term cycle top, which 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. Until that happens, higher prices in association with this higher degree cycle advance will remain possible. Again, 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. The price/oscillator picture was heavy as we moved into late last week and on Monday a short-term sell signal was triggered. On Wednesday a daily swing low was completed and a short-term buy signal was re-triggered, which was followed by more strength on Thursday. 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. However, as with Gold, until a weekly swing high and downturn of the weekly CTI is seen, this intermediate-term advance will remain intact. 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 14

13 Dollar End of Week Intermediate-Term Indicator Summary Intermediate-Term Sell Formation of a Weekly Swing High 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 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/was due, which in turn suggested that the advance out of the December 20th 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. Given the violation of the December 20th low, current evidence does suggest that we should have a failed and left-translated trading cycle at play in association with the intermediate-term cycle top and the decline into the intermediate-term cycle low. So, until we see evidence to the contrary, this assumption will stand. In order to begin to negate this setup, we would have to see a bettering of the December 26th high, prior to a violation of the January 2nd low. Should that happen, then perhaps something else is trying to take hold here. 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 advance out of the December 13th trading cycle low remains intact. This advance had begun to struggle, which was putting Bonds at risk of a left-translated trading cycle top. But, the buy signal managed to hold and on December 31st another daily swing low was completed. In doing so, this advance finally got into gear and the needed move above the December 26th high was seen. In the early portion of the last update I said that we needed to see a move above the December 16th high. That was a typo. We were already above the December 16th high and I meant to say the December 26th high, which I did say in the latter portion of the commentary. Anyway, the threat of a left-translated trading cycle has been eliminated and this trading cycle advance will remain intact until another daily swing high and downturn of the daily CTI is seen. The intermediate-term buy signal also remains in force. Copyright 2018 by Tim Wood 16

15 Crude Oil The December 26th short-term buy signal remains intact, but still hasn t made much progress since the signal was triggered. With the evidence continuing to be suggestive of the advance out of the November low having been a failed intermediate-term cycle advance, the expectation is for this to be a counter-trend bounce. Once a daily swing high is formed and confirmed by a downturn of the daily CTI, this countertrend top should be in place. Until then, the opportunity for this bounce remains in force. A daily swing high will be completed on Friday if is not bettered and if is violated Cycles News & Views; All Rights Reserved timwood1@cyclesman.com Copyright 2018 by Tim Wood 17