Cycle Turn Indicator Direction and Swing Summary. of Select Markets as of the close on. October 26, Daily CTI. Swing

Transcription

1 Cycle Turn Indicator Direction and Swing Summary of Select Markets as of the close on October 26, 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 High Negative High Dollar Positive Low Positive Low Bonds Positive Low Positive Low Crude Oil Positive 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 28, 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 Both the short and intermediate-term sell signals on the Industrials remain intact. Short-term, the oscillator picture hints of a low, but based on the cyclical phasing, the trading cycle low is not yet due and for that reason, any advance at this juncture should be counter-trend and should be followed by lower prices into the timing band for the trading cycle low. Based on the growing list of indexes, averages and sectors that are now structurally suggestive of the 4-year cycle top, every indication is that the Industrials and other mainstream US indexes have in fact been providing cover for the ongoing higher degree setup that continues slowly falling into place. At this point I do not have the needed structure to say that the Industrials, the Transports or the S&P have made their 4-year cycle top. However, until they can prove otherwise, the assumption at this point is that the higher degree 4-year cycle top is more likely than not in place. I can say that the structural evidence is suggestive of the 4-year cycle top on the Dow Jones World Index, the NYSE Composite, the NYSE World Leaders and the Value Line Geometric Index, along with the other indexes and Copyright 2018 by Tim Wood 5

4 sectors I have discussed in the past. I will include a more complete list in the November letter, which will be out next Sunday. The short-term buy signal on Gold remains intact, but the trading cycle top should be close at hand. Wednesday s short-term sell signal on the XAU remains intact and as of the close on Friday it has further evolved into an intermediate-term sell signal, which should ideally mark the intermediate-term countertrend top and Gold should follow. The short-term sell signal in Crude Oil remains intact, but short-term conditions also remain ripe for a bounce. The ongoing short-term sell signal on the CRB Index remains intact and while conditions are now ripe for a short-term low, the price action this past week further evolved into an intermediate-term sell signal. Thus, any short-term buy signal should be counter-trend. The shortterm buy signal in the Dollar remains intact, but the oscillator picture has ripened for a short-term top. The trading cycle low in Bonds was seen on October 9th and the evidence has been increasingly suggestive of that low also having marked the intermediate-term cycle low. Now, with an intermediate-term buy signal being triggered, the assumption is that the intermediate-term cycle low has in fact been seen. Copyright 2018 by Tim Wood 6

5 In the first chart below I have included a monthly chart of the NYSE Composite. There is no question that trend lines are subjective. However, this large megaphone pattern is something I have been watching on the Industrials and various other indexes for years. Given the violation of the previous seasonal cycle low, the structure here suggests that the 4-year cycle top is in place. The 1998, the 2001, the year cycle tops and the current interaction with the upper trend line, seem to have merit. I realize that a return to the lower trend line seems like an impossibility, but it is certainly a risk. Copyright 2018 by Tim Wood 7

6 For a long-term perspective on the Industrials, I have included a semi-log scaled monthly chart going back to the 1929 top. There are two primary things I want to point out here. First, we have what is potentially a very similar megaphone pattern, which if applicable, we also have a massive throw-over that has occurred in conjunction with this entire 4-year cycle advance out of the year cycle low. Secondly, we have the long-term channel lines from the 1929 top and the 1932 low. Notice how the upper line intersected with the 2000 top and the current high. Also notice how the lower line just happens to intersect with the 1982 low and now, with what is potentially the lower megaphone line. I m not making any projections based on these long-term trend lines. But, I do think that these longer-term trend lines show the extremity of the bubble we have been operating within and at minimum the potential risk associated with the unwinding of this bubble. Copyright 2018 by Tim Wood 8

7 The first chart below shows our distribution indicator. The red intermediate-term Advancing issues line is tied to the intermediate-term cycle, which has ticked back down. The green line continues to weaken below the black line, which also continues to weaken. Copyright 2018 by Tim Wood 9

8 The Trading Cycle Oscillator in the upper window remains negative, which continues to be reflective of the failing trading cycle advance. The Momentum indicator in the upper window remains below its zero line, which continues to be suggestive of the failed and left-translated trading cycle advance. The stochastic in the middle window has turned back below its trigger line. The first of our Primary Short-Term Indicators is the New High/New Low Differential, plotted with price, which has also turned back down. The Trend Indicator remains below its trigger line. Copyright 2018 by Tim Wood 10

9 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 as of the close on Friday, all three of the Primary Short-Term Indicators are again in gear to the downside. Bottom line, the ongoing short-term sell signal will continue to stand until a daily swing low AND upturn of ALL Three of the Primary Short-Term Indicators is seen and based on the cyclical phasing and structure, any bounce should be counter-trend. Copyright 2018 by Tim Wood 11

10 Both the Intermediate Term Breadth Momentum Oscillator and the Intermediate Term Volume Momentum Oscillator remain below their trigger lines. Copyright 2018 by Tim Wood 12

11 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. The Ratio Adjusted McClellan Oscillator has turned back below the trigger line I ve added and in doing so this leaves Equities in a risky position. Copyright 2018 by Tim Wood 13

12 Next is the Smoothed McClellan Oscillator, which has crossed back below its trigger line, which is also reflective of the failed and left-translated trading cycle top. Copyright 2018 by Tim Wood 14

13 The Accumulation/Distribution Index remains marginally above its trigger line, which was reflective of a bounce that may have potentially run its course with the intraday bounce seen on Friday. Copyright 2018 by Tim Wood 15

14 Next is our weekly chart of the Industrials and there has been no change at this level. The intermediate-term cycle top was seen on October 3rd and the accompanying intermediate-term sell signal remains in force. The timing band for the pending intermediate-term cycle low runs between October 17th and December 19th. We know that the intermediate-term cycle low will occur in conjunction with the lower degree trading cycle low and with the current trading cycle low having occurred prior to price having moved into the intermediate-term timing band, there should be at least one more trading cycle down before the intermediate-term cycle low is seen. The crossing of the Trend Indicator below its trigger line two weeks ago was suggestive of the higher degree seasonal cycle top and the continued weakness this past week serves as further evidence to that effect. I said here in last weekend s update that with many of the leading indexes, averages and sectors suggestive of their seasonal and 4-year cycle tops there is also a very good chance this intermediate-term cycle top marked those higher degree tops on the Industrials. As stated above, we will now operate under the assumption that that is the case, but we must still see the structural evidence with regard to those higher degree cycle tops on the Industrials. This intermediate-term sell signal should still be followed by lower prices into the next trading and intermediate-term cycle low. Based on the phasing of the higher degree seasonal cycle, the advance out of the next intermediate-term cycle low should be countertrend and we should still have one more intermediate-term cycle down into the higher degree seasonal cycle low. More on that once we see when and where this low occurs. In Summary, the suspected failed and left-translated trading cycle top has proven to be reality and based on the current structure and cyclical phasing, lower prices into the next trading and intermediate-term cycle low should still follow. Short-term, a bounce is possible, but to not see continued overall weakness in association with this setup would be very unusual behavior, which I would in turn have to classify as another market miracle. This remains a technically risky juncture for Equities. Copyright 2018 by Tim Wood 16

15 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 has been ripe for another top and as a result of Friday s price reversal the price/oscillator picture continues to mature. Nonetheless, until a shortterm sell signal is triggered we cannot yet say that this top has been seen. Conditions are indeed ripe for the trading cycle top and once a daily swing high is formed and confirmed by a downturn of the daily CTI, this top should be in place. A daily swing high will be completed on Monday 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 and the key there will be the completion of a weekly swing high in association with the decline out of this trading cycle top. Copyright 2018 by Tim Wood 17

16 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, but this sell signal was further confirmed and it has proven to have marked the trading cycle top. The expectation is that Gold will follow. I have said that the advance out of the intermediate-term cycle low should be counter-trend and that this trading cycle top would be an opportunity to cap the intermediate-term cycle advance. As of the close on Friday, we have a weekly swing high and intermediate-term sell signal in place and as a result, the assumption is that the intermediateterm cycle top is in place. Again, the expectation is that Gold should follow, which means that it too should not only be at or near its trading cycle top, but also the intermediate-term cycle top as well. Copyright 2018 by Tim Wood 18

17 Our weekly chart of Gold is next. The intermediate-term cycle low last occurred the week of August 17th, but it was not until the week of October 12th that the August 17th price bar was bettered and the corresponding intermediate-term buy signal was finally triggered. As of the close on Friday, this intermediate-term advance and the corresponding intermediate-term buy signal remains intact. However, the higher degree cyclical structure has been and continues to be suggestive of the higher degree 9-year cycle top and for this reason this advance is expected to be counter-trend. The timing band for the next intermediate-term cycle low runs between December 7th and January 25th. With the last seasonal cycle low having occurred in December 2017, the expectation has been for the advance out of the August low to be a counter-trend advance that is followed by further weakness into the higher degree seasonal cycle low. For now, this intermediate-term buy signal will continue to stand until another weekly swing high and downturn of the weekly CTI, plotted with price, is seen. 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 19

18 The weekly chart of the XAU is next and this past week we saw a clear completion of a weekly swing high and downturn of the weekly CTI. This resulted in the triggering of an intermediate-term sell signal and what should have marked the intermediate-term/counter trend top. Copyright 2018 by Tim Wood 20

19 Dollar 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 Indicators Stochastic The timing band for the current trading cycle low runs between October 17th and October 31st. Given that we are now this far into the timing band, along with the additional strength we have seen this past week, the evidence continues to point toward the October 16th daily swing low as having marked the trading cycle low. The price action this past week put a weekly swing low and intermediate-term buy signal into motion, which is even further suggestive of the trading cycle low. With regard to the higher degree cycle, we need to see this trading cycle advance unfold with a right-translated structure and we ideally need to see it better the August high in order to correct the potential of a left-translated intermediate-term cycle top. That said, in light of the current oscillator picture and the price reversal seen on Friday, the Dollar is at risk of the current trading cycle top, which is not yet right-translated. More on this as it develops. For now, the ongoing short-term buy signal will stand until another daily swing high and downturn of the daily CTI is seen. Hopefully there will be another push up here, but a daily swing high will be completed on Monday if is not bettered and if is violated. Copyright 2018 by Tim Wood 21

20 Next, is our weekly chart of the Dollar. We have been seeing mixed signals at this level and the Dollar has been at an important technical juncture. The price action this past week completed the formation of a weekly swing low that was confirmed by an upturn of the weekly CTI, which in turn triggered another short-term buy signal. The timing band for the intermediate-term cycle low runs between November 2nd and December 21st. Therefore, the September 21st weekly swing low should not have marked the intermediate-term cycle low. However, in order to correct the ongoing risk of a left-translated intermediateterm cycle top, the August high must still be bettered. In doing so, this would also clear the 6th month hurdle of the seasonal cycle. Bottom line, while we now have an intermediate-term buy signal in place, if the higher degree seasonal cycle top is not in place, we still must see this intermediate-term cycle unfold with a righttranslated structure. Copyright 2018 by Tim Wood 22

21 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 Tuesday s short-term buy signal remains intact and on Friday additional strength followed. In doing so, this trading cycle advance is now right-translated, which is further suggestive of the October low also having marked the intermediate-term cycle low. We also saw the completion of a weekly swing low this past week that was confirmed by an upturn of the weekly CTI, which triggered an intermediate-term buy signal, which is further suggestive of the intermediate-term cycle low. Based on these developments, every indication is that the intermediate-term cycle low was in fact seen in conjunction with the recent trading cycle low. This ongoing short-term buy signal will remain intact until another daily swing high and downturn of the daily CTI is seen, but as a result of these developments, the decline into the trading cycle low is now expected to hold above the October low. Copyright 2018 by Tim Wood 23

22 Our weekly chart of Bonds is next. The timing band for the current intermediate-term cycle low runs between August 31st and November 23rd. Based on this phasing, we knew that the intermediate-term cycle low should be seen in conjunction with either the recent trading cycle low or the next. As explained above, with this trading cycle advance now right-translated, along with the triggering of an intermediate-term buy signal, every indication is that the low was seen in conjunction with the recent trading cycle low. At a higher level, because of the evidence of a failed seasonal and 3-year cycle, the advance out of this intermediate-term cycle low is expected to be counter-trend, but in the meantime, this intermediate-term buy signal will stand. Copyright 2018 by Tim Wood 24

23 Crude Oil As of Friday, all of the price action since Tuesday has occurred within Tuesday s price range and for this reason, there has been no change. The October 4th short-term sell signal remains intact as does the intermediate-term sell signal that followed the week of October 12th. The expectation continues to be that the push into the October high was an ending move into the higher degree seasonal and 3-year cycle top but short-term the stochastic remains at oversold levels, which continues to make conditions ripe for a bounce. However, 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 Monday 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. Copyright 2018 by Tim Wood 25

24 Next, is our weekly chart of Crude Oil. The intermediate-term sell signal in association with the intermediate-term cycle top remains intact. The downturn of the Trend Indicator is further suggestive of the higher degree seasonal cycle top, which first appeared to have peaked in July. The additional advance above the July high was not expected, but it should have nonetheless been an ending move into the anticipated higher degree cycle top. The decline that has followed in the wake of this intermediate-term sell signal, is now approaching oversold levels. In the event a weekly swing low is seen in association with the advance out of the pending trading cycle low, then the intermediate-term cycle low should be in place. The October intermediate-term cycle top should have also marked the higher degree seasonal and 3-year cycle top, but further evidence to prove it has to develop and the next test will be the advance out of the pending intermediate-term cycle low Cycles News & Views; All Rights Reserved timwood1@cyclesman.com Copyright 2018 by Tim Wood 26