Cycle Turn Indicator Direction and Swing Summary. of Select Markets as of the close on. October 23, Daily CTI. Swing

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1 Cycle Turn Indicator Direction and Swing Summary of Select Markets as of the close on October 23, 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 Positive Low Positive High Dollar Positive Low Positive Low Bonds Positive Low Positive Low Crude Oil Negative High Negative High Unleaded Negative High 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. October 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 As we opened the day on Tuesday 65.89% of the NYSE stocks and 54.8% of the S&P 500 stocks were below their 200 day moving average and of the Dow Industrial stocks, % had moved below their 200 day MA s. Structurally, the evidence continues to be suggestive of the 4-year cycle top on the Dow Jones World Index and the other leading indexes, averages and sectors that we have been following. On the open, the Industrials gapped below their October 11th trading cycle low and in doing so the suspected left-translated trading cycle should have been cast in stone. 48 minutes later the low tick was seen and the market spent the rest of the day in recovery mode. Looking at an intraday chart, the recovery simply filled the gap from the open, which does leave you wondering if this was yet another market miracle, or was it just the market being the market filling the gap before moving lower. I must admit that I find the price action fascinating given that it occurred immediately following the violation of the October 11th trading cycle low. Technically, here s what we know: The trading cycle low was either seen on September 26th, in which case we have already had a left-translated trading cycle at play, or it was seen on October 11th, which I think is more Copyright 2018 by Tim Wood 5

4 likely the case and Tuesday s gap lower set the left-translated trading cycle into motion. We have also known that the higher degree intermediate-term cycle low still lies ahead and that regardless of the phasing of the trading cycle, there should be one more trading cycle down into that low. Therefore, as a result of the gap down and confirmation of the suspected left-translated trading cycle, the recovery we saw throughout the day on Tuesday should have simply been a filling of the gap before moving lower. And, even if the trading cycle low was by chance seen on September 26th, we are nowhere near the timing for a trading cycle low and we still would have a left-translated trading cycle at play. So, the test as to if this was another market miracle is certainly at hand. Based on the current cyclical structure and phasing, to not see lower prices into the next trading and intermediate-term cycle low would indeed be mysterious and unexplained structural behavior. As we move into Wednesday, we without question have a left-translated trading cycle at play and both the trading and intermediate-term cycle lows should lie ahead, which suggests that further weakness should follow. Based on this structure, Equities are in an increasingly risky position. And, as of the close on Tuesday, 68.51% of the NYSE stocks, 56.2% of the S&P stocks and 33.33% of the Industrials are sitting below their 200 day moving average. The short-term buy signal on Gold remains intact and the XAU re-triggered a marginal short-term buy signal on Tuesday. The resulting non-confirmation with Gold suggests that this is a counter-trend advance, but until a short-term sell signal is followed by the completion of a weekly swing high and an intermediateterm sell signal, the counter-trend advance will remain intact. I have said that while the additional advance into the October high in Crude Oil was not expected, it should nonetheless have been an ending moving into the higher degree cycle tops. That expectation stands and thus far, the short and intermediate-term sell signals have continued to be followed by further weakness. Last week s short-term sell signal on the CRB Index remains intact and thus far the price action this week has put a weekly swing high into motion that is at this point being confirmed by a downturn of the weekly CTI. If nothing changes by Friday, we will have an intermediate-term sell signal in place, which should serve to confirm the intermediate-term cycle top, which should be further indicative of the higher degree cycle top in Crude Oil and which should also ideally occur in close proximity with the intermediate-term cycle top in the metal complex as well. The trading cycle low in Bonds was seen on October 9th and the evidence is now increasingly suggestive of that low also having marked the intermediate-term cycle low as well. Copyright 2018 by Tim Wood 6

5 The first chart below shows our distribution indicator. The red intermediate-term Advancing issues line is tied to the intermediate-term cycle, which has been hinting of a failing trading cycle advance and which remains negative. The green line continues to weaken below the black line, which also continues to weaken. Copyright 2018 by Tim Wood 7

6 The Trading Cycle Oscillator in the upper window turned back up in light of Tuesday s price reversal. The Momentum indicator in the upper window has crossed below its zero line, which is suggestive of what should be a failed and left-translated trading cycle advance. The stochastic in the middle window remains below its trigger line and in neutral territory. The first of our Primary Short-Term Indicators is the New High/New Low Differential, plotted with price, which remains negative and is now also suggestive of what should be a failed and left-translated trading cycle top. 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. The price/oscillator picture and cyclical phasing continues to be suggestive of the trading cycle low having been seen on October 11th and now, as a result of the violation of that low, every indication is that we have a failed and left-translated trading cycle at play. Bottom line, this short-term sell signal will continue to stand until a 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 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 in gear to the downside. In spite of the price reversal seen on Tuesday, the Ratio Adjusted McClellan Oscillator closed below the trigger line I have added. As a result, this leaves the Equity market in an increasingly risky and vulnerable position in association with what should be a failed and left-translated trading cycle top. Copyright 2018 by Tim Wood 11

10 Next is the Smoothed McClellan Oscillator, which remains above its trigger line, but which is also beginning to roll back over. A turn back below the trigger line will be further indicative of the failed and left-translated trading cycle top. Copyright 2018 by Tim Wood 12

11 The Accumulation/Distribution Index has crossed below its trigger line, which is also suggestive of the failed and left-translated trading cycle top. In Summary, we should have a failed and left-translated trading cycle top in place and lower prices into the trading and intermediate-term cycle low should follow. To not see further weakness in association with this setup would be very peculiar behavior indeed, which I would in turn have to classify as yet another market miracle. This is a technically risky juncture for Equities. Copyright 2018 by Tim Wood 13

12 Gold End of Week Intermediate-Term Indicator Summary Intermediate-Term Buy Daily Indicator Summary Short-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 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 low last bottomed on September 28th and the timing band for the next trading cycle low runs between October 24th and November 7th. The oscillator picture had been ripe for another top, but a short-term sell signal had not been triggered and on Tuesday another push up in association with this trading cycle advance was seen. As a result, this trading cycle advance is now clearly right-translated as the higher degree intermediate-term advance remains intact. The cyclical phasing suggests that price should be at or near the trading cycle top, but until a daily swing high AND downturn of the daily CTI are seen, the shortterm buy signal will remain in force. A daily swing high will be completed on Wednesday if 1, is not bettered and if 1, is violated. The pending trading cycle top will also mark an opportunity to cap the higher degree cycle advance, but a weekly swing high is the key there. Copyright 2018 by Tim Wood 14

13 Our daily XAU chart is next. On Tuesday price completed the formation of another daily swing low that was confirmed by a marginal upturn of the daily CTI, which in turn triggered a squeaker of a short-term buy signal. With this advance not carrying the XAU above its previous high, along with the reversal lower, suggests that the advance in Gold is an ending move into the trading cycle top. Any further weakness on the XAU that completes the formation of a daily swing high, which is accompanied by another downturn of the daily CTI, will re-trigger another short-term sell signal, which should serve to cap the trading cycle top. As with Gold, this trading cycle top will also be an opportunity to cap the intermediate-term cycle top as well and the completion of a weekly swing high is key with respect to that higher degree cycle top. A daily swing high will be completed on Wednesday if is not bettered and if is violated. Copyright 2018 by Tim Wood 15

14 Dollar End of Week Intermediate-Term Indicator Summary Intermediate-Term Neutral 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 Buy 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 current trading cycle low runs between October 17th and October 31st. As previously explained, another push down further into this timing band was ideal, but so far price has continued to hold and for that reason the evidence continues to point toward the October 16th daily swing low as having marked the trading cycle low. In the event we see the October 16th low violated as we move through the remainder of this timing band then, we will re-evaluate the evidence at that time with regard to the phasing of this cycle. In the meantime, current evidence and the ongoing assumption is that the trading cycle low was seen on October 16th and this short-term buy signal will stand until another daily swing high and downturn of the daily CTI is seen. A daily swing high will be completed on Wednesday 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 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 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 advance on Tuesday completed the formation of another daily swing low that was confirmed by another upturn of the daily CTI, which re-triggered another short-term buy signal. This advance has also put a weekly swing low and intermediate-term buy signal into motion, which is further suggestive of the higher degree intermediate-term cycle low. As further confirmation of this low we next need to see this trading cycle clearly right-translated and we must see the next trading cycle low hold above the previous trading cycle low. Based on the developments currently at hand, we can now assume that the intermediate-term cycle low has likely been seen, but we still have to see this intermediate-term buy signal confirmed with a weekly close as well as what the remainder of this trading cycle yields. In this event the intermediate-term cycle low is not in place, it should be with the next trading cycle low. Copyright 2018 by Tim Wood 17

16 Crude Oil The October 4th short-term sell signal remains intact as does the intermediate-term sell signal that followed the week of October 12th and the expectation is that the push into the October high was an ending move into the higher degree seasonal and 3-year cycle top. Short-term the stochastic remains at oversold levels, which continues to make conditions ripe for a bounce. But, until a daily swing low is formed and confirmed by an upturn of the daily CTI, the October 4th sell signal will continue to stand and lower prices will consequently remain possible. Once a daily swing low and upturn of the daily CTI is seen, the trading cycle low should be in place. Until such time, the October 4th short-term sell signal will remain intact. A daily swing low will be completed on Wednesday if holds and if is bettered. Based on the expectation that the higher degree cycle top was seen in conjunction with the October high, the advance out of the pending trading cycle low should be counter-trend Cycles News & Views; All Rights Reserved timwood1@cyclesman.com Copyright 2018 by Tim Wood 18

17 Copyright 2018 by Tim Wood 19