Cycle Turn Indicator Direction and Swing Summary. of Select Markets as of the close on. January 11, Daily CTI. Swing

Transcription

1 Cycle Turn Indicator Direction and Swing Summary of Select Markets as of the close on January 11, 2019 Market Daily CTI Daily Swing Weekly CTI Weekly Swing Industrial Positive Low Positive Low Transports Positive Low Positive Low NDX Positive High Positive Low S&P Inverse Fund Negative N/A * Negative High CRB Index Positive Low Positive Low Gold Negative Low Positive Low XAU Negative High Positive Low Dollar Positive High Negative High Bonds Negative High Positive High Crude Oil Positive Low Positive Low Unleaded Positive Low Positive Low Natural Gas Positive Low Positive Low *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 Buy/Neutral Primary Indicators Formation of a Weekly Swing Low 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. January 13, 2019 Daily Indicator Summary Short-Term 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 advance out of the December 26th trading cycle low continues pressing higher and in doing so it is increasingly looking as if the intermediate-term cycle low was seen in conjunction with the December low rather than the October low. We know that many asset classes move to a similar cyclical rhythm as that of Equities and now with this phasing proving to be applicable with Crude Oil, the CRB and even Bitcoin, while we cannot yet prove it on Equities alone, it is now by default increasingly looking as if it is also applicable on Equities. In the event it proves that the December low is the correct phasing, it means that we are early into a new intermediate-term cycle, which gives the market more time to decline into what should be the seasonal and 4-year cycle low. Looking at it from this perspective, this phasing is now also making more sense. Hopefully, the phasing of the intermediate-term cycle will clarify itself soon. In the meantime, regardless of that phasing, the buy signal in association with what should be a counter-trend advance remains intact. Upon the triggering of a short-term buy signal, the opportunity to cap this counter-trend advance will be at Copyright 2018 by Tim Wood 5

4 hand and the first indication that this is the case will come with the completion of a weekly swing high and re-triggering of an intermediate-term sell signal. The short and intermediate-term buy signals in Gold remain intact, but the trading cycle top, if not in place, should be seen in conjunction with any additional push up. Thursday s short-term sell signal on the XAU remains intact, which is indicative of the trading cycle top. A lower close below the January 8th low should serve to confirm the trading cycle top. If the decline into the trading cycle lows in both Gold and the XAU complete the formation of weekly swing highs, then we should have the intermediate-term cycle tops in place as well. The trading cycle advance in Crude Oil also remains intact, but as a result of the price reversal seen on Friday, along with the accompanying oscillator picture, the trading cycle top should be near. The continued advance in Crude Oil is also indicative of the December low having marked the intermediate-term cycle low rather than the November low. The short-term buy signal on the CRB Index also remains intact, but here too, the price/oscillator picture is suggestive that the trading cycle top should be close. Also as with Crude Oil, the evidence continues to be suggestive of the December low having marked the intermediateterm cycle low in association with what should be a counter-trend advance. The Dollar is now approaching the timing band for the trading cycle low and once a daily swing low and upturn of the daily CTI are seen, that low should be in place. Bonds should be at or near their trading cycle low. Below is our distribution indicator. The red intermediate-term Advancing issues line is tied to the intermediate-term cycle, which after violating its October low, has now bettered its December high. Looking back into the 1920 s, there are limited occurrences of such patterns. Of the dozen or so patterns I found, a couple of them were associated with lows, but the vast majority were associated with counter-trend advances that were followed by lower lows. The green MA line remains solidly below the black MA line, which is suggestive of what appears to be a failed and lefttranslated intermediate-term cycle. Copyright 2018 by Tim Wood 6

5 The Trading Cycle Oscillator in the upper window remains marginally positive. The Momentum indicator in the upper window remains above its zero line. The stochastic in the middle window remains at overbought levels. The first of our Primary Short-Term Indicators is the New High/New Low Differential, plotted with price, which remains flat. The Trend Indicator remains positive in association with the trading cycle low. 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. Bottom line, the expectation continues to be that the advance out of the December 26th low is counter-trend. However, the buy signal in association with this advance will remain intact until another daily swing high AND downturn of ALL Three of the Primary Short-Term Indicators are 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. The Ratio Adjusted McClellan Oscillator is trying to roll over from historically extreme levels. I covered the details surrounding this in the January 8th shortterm update, so please refer to the details there. A crossing below the trigger line in conjunction with the triggering of a short-term sell signal should serve to confirm the anticipated top. Copyright 2018 by Tim Wood 10

9 Next is the Smoothed McClellan Oscillator, which also remains well above its trigger line in association with the upturn out of the December low. Copyright 2018 by Tim Wood 11

10 The Accumulation/Distribution Index turned back up on Friday. Another down turn below its trigger line will be suggestive of the trading cycle top. Copyright 2018 by Tim Wood 12

11 Next is our weekly chart of the Industrials. The price action the week of January 4th completed the formation of weekly swing low and the price action this past week turned the weekly CTI up, which triggered an intermediate-term buy signal. The timing band for the intermediate-term cycle low ran between October 17th and December 19th. We have been operating under the assumption that the intermediate-term cycle low was seen on October 29, but with that low occurring on the early side of the timing band for this low, we have also known that another push down into the outer portion of the timing band for this low was also possible and we have been watching the light blue verses the dark blue scenario on the weekly chart for over a month. The December 26th low obviously fell one week beyond the timing band for this low, but it is certainly possible for it to have marked a slightly long intermediate-term cycle. Given the corresponding intermediate-term cycle low in Crude Oil and the CRB, the evidence is suggestive of that having been the case. We know that there has been a similar cyclical rhythm in other asset classes as well and even Bitcoin clearly made an intermediate-term cycle low in December verses October. However, there is still insufficient evidence to either prove or disprove it in the Equity markets themselves at this time, so we are going to have to let the evidence there develop. Regardless of this phasing, the statistics on the seasonal cycle point toward the 4-year cycle low lying ahead and for that reason this should be a counter-trend advance whether it is of trading cycle or intermediate-term cycle degree. Once a short-term signal is triggered and the decline out of the trading cycle top begins this will hopefully clarify itself. Assuming that the 4-year cycle low does in fact still lie ahead in accordance with the statistical norms of the current seasonal cycle, then to have made the intermediate-term cycle low in December actually seems to be a better fit because it gives the markets longer to decline into the next intermediate-term and what should be the nesting of higher degree cycle lows. I will discuss this more as it develops and the evidence presents itself. While I can t prove it, I have to say that I am increasingly suspicious of the intermediate-term cycle low having been seen in December. For now, the intermediate-term buy signal stands. In summary, short of another market miracle and regardless of the phasing of the advance out of the December low, it should be countertrend and the higher degree intermediate-term, seasonal and 4-year cycle low should still lie ahead. The opportunity to cap this intermediateterm advance will come with the triggering of a short-term sell signal. Copyright 2018 by Tim Wood 13

12 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 With Friday being an inside day, there were no changes. The evidence continues to be suggestive of the January 4th high having marked the trading cycle top and with the timing band for the trading cycle low now upon us, we should ideally have the trading cycle top in place and the decline into the trading cycle low should follow. But, with all of the price action since January 4th having occurred within the January 4th price bar, we have not yet seen the completion of a daily swing high. For this reason, we have not yet seen the triggering of a short-term sell signal as confirmation. The timing band for the next/pending trading cycle low runs between January 11th and January 25th. Based on the price/oscillator picture, the assumption is that the top is in place and that the decline into the trading cycle low is at hand, but we need to see it confirmed with a violation of the January 4th low, which will trigger a short-term sell signal, which will serve to further confirm the suspected trading cycle low. Overall, the advance out of the August low is expected to be counter-trend and the current trading cycle top will be an opportunity to cap this counter-trend advance. If we see the completion of a weekly swing high in association with the decline into the trading cycle low, then we should have the intermediate-term cycle top in place. Until then, higher prices in association with this higher degree cycle advance will remain possible. A daily swing high will be completed on Monday if 1, is not bettered and if 1, is violated. Copyright 2018 by Tim Wood 14

13 Our daily chart of the XAU is next and Friday was also an inside day here as well, which resulted in no changes here either. Thursday s short-term sell signal remains intact and the oscillator picture is definitely ripe for the trading cycle top. With the timing band for the trading cycle low approaching, this trading cycle top should be near if not seen on Wednesday. Any further weakness that carries price below the January 8th daily swing low, should serve to confirm the trading cycle top, but I also want to see a joint sell signal in Gold as well. 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 and as with Gold, this trading cycle top will be an opportunity to cap the higher degree intermediate-term cycle advance. If the decline into the next trading cycle low completes the formation of a weekly swing high, then we will at that time have evidence that the intermediate-term cycle top has also been seen. Copyright 2018 by Tim Wood 15

14 Next is our weekly chart of Gold. The intermediate-term buy signal remains intact and the overbought oscillator picture is suggestive of the intermediate-term cycle top. We know that the August low marked an intermediate-term and higher degree seasonal cycle low and that the timing band for the next intermediateterm cycle low runs between December 7th and January 25th As deep as we are into this timing band and in light of the current oscillator picture, the intermediate-term cycle top should be at hand. Once a weekly swing high and downturn of the weekly CTI, plotted with price, is seen this top should be in place. A weekly swing high will be completed in the coming week if 1, is not bettered and if 1, is violated. A continued advance and/or failure to see the intermediate-term cycle low by January 25th will begin to point toward the November 11th weekly swing low as having marked an early intermediate-term cycle low, which will in turn change the phasing for the next intermediate-term cycle low. Regardless, the oscillator picture is ripe for an intermediate-term cycle top and the completion of a weekly swing high is key. Copyright 2018 by Tim Wood 16

15 The weekly chart of the XAU is next and here too, the oscillator picture is suggestive of the intermediateterm cycle top. Once weekly swing highs in both Gold and the XAU are seen, intermediate-term cycle tops should be in place and the opportunity to cap the counter-trend advance will be at hand. Until then, the intermediate-term buy signal will remain intact and higher prices will remain possible. A weekly swing high will be completed in the coming week if is not bettered and if 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 short-term sell signal remains intact, but the oscillator picture continues to be indicative of the pending trading cycle low. With the timing band for the next trading cycle low running between January 14th and January 25th, we should ideally have another few days of weakness before this low is seen. If so, I would expect to see oscillator divergences form in conjunction with any such push down. That said, the oscillator picture is ripe for this low and should we see a daily swing low and upturn of the daily CTI this close to the timing band, it may be that we have seen a slightly early trading cycle low. Should this occur we will have to examine the evidence at that time. With this trading cycle low falling on the early side of the timing band for the higher degree intermediate-term cycle low, it is also possible to see the intermediate-term cycle low in conjunction with the pending trading cycle low. For now, the decline into the trading cycle low will stand until a daily swing low and upturn of the daily CTI are seen. A daily swing low will be completed on Monday if holds and if is bettered. Copyright 2018 by Tim Wood 18

17 Next is our weekly Dollar chart and the decline into the intermediate-term cycle low remains intact. The timing band for this low runs between January 11th and March 1st. Ideally, there should be another trading cycle down to carry price into the middle portion of the timing band for this low and which pulls the oscillators into oversold territory. However, with the pending trading cycle low occurring on the early side of this timing band, it is possible to see this higher degree cycle low in conjunction with the pending trading cycle low. In the event we see the completion of a weekly swing low and upturn of the weekly CTI, plotted with price, then we will at that time have evidence of such occurrence. More on that once we get there. 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/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 Sell Primary Indicators Formation of a Daily Swing High Cycle Turn Indicator (CTI) Confirming Indicators Trend Indicator (TI) Cycle Momentum Indicator Secondary Short Term Indicators Stochastic Friday was an inside day, so there were no changes. The decline into the trading cycle low has carried price to oversold levels, per the stochastic and with price now also approaching the middle portion of the timing band, this trading cycle low should be close at hand. The timing band for this low runs between January 4th and January 25th. Once a daily swing low is formed and confirmed by an upturn of the daily CTI, the trading cycle low should be in place. Copyright 2018 by Tim Wood 20

19 Our weekly chart of Bonds is next. The timing band for the next intermediate-term cycle low runs between February 1st and April 19th. The price action this past week completed the formation of a weekly swing high, which in conjunction with the downturn of the Cycle Momentum Index and the stochastic is suggestive of the intermediate-term cycle top. Any further weakness that turns the weekly CTI, plotted with price, down, will trigger an intermediate-term sell signal, which should serve to confirm the intermediateterm cycle top. With this intermediate-term cycle advance being right-translated, it is suggestive of the October low having marked the higher degree cycle lows, as was discussed in the January research letter. Copyright 2018 by Tim Wood 21

20 Crude Oil The December 26th short-term buy signal remains intact, but in light of the price reversal on Friday and the continued ripening of the oscillator picture, conditions are indeed ripe for a top. As with Equities, this should ideally be a counter-trend advance and once a daily swing high and downturn of the daily CTI is seen, a short-term sell signal will be triggered. If the decline in association with the pending short-term top also completes the formation of a weekly swing high, then we will also have the makings of the intermediate-term cycle top in place, which should then in turn cap the counter-trend intermediate-term advance out of the December low. Knowing the similar cyclical rhythm with Equities, this is also suggestive of the December low having marked an intermediate-term cycle low there as well. 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 and as a result of the continued advance out of the January 4th weekly swing low, every indication is that the December low marked the intermediate-term cycle low rather than the November low. The pending trading cycle top will be an opportunity for the intermediate-term/counter-trend top. If a weekly swing high AND downturn of the weekly CTI is seen in association with the decline out of the pending trading cycle top, then we should prove to also have this intermediate-term cycle top in place as well. If not, then higher prices should be expected following the decline into the trading cycle low. A weekly swing high will be completed in the coming week if is not bettered and if is violated Cycles News & Views; All Rights Reserved timwood1@cyclesman.com Copyright 2018 by Tim Wood 23