Cycle Turn Indicator Direction and Swing Summary of Select Markets as of the close on December 27, 2018 Market Daily CTI Daily Swing Weekly CTI Weekly Swing Industrial Positive Low Negative High Transports Positive Low Negative High NDX Positive Low Negative High S&P Inverse Fund Negative N/A * Positive Low CRB Index Positive Low Negative High Gold Positive Low Positive Low XAU Positive Low Positive Low Dollar Positive High Negative High Bonds Negative Low Positive Low Crude Oil Positive Low Negative High Unleaded Positive Low 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
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
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 5 3 3 Stochastic Cycle Momentum Indicator *When this indictor is it is negative for the market and visa versa. December 27, 2018 Daily Indicator Summary Short-Term Buy/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 5 3 3 Stochastic Cycle Momentum Indicator Trading Cycle Oscillator Momentum Indicator Ratio Adjusted McClellan Oscillator Crossover Accumulation/Distribution Index The timing band for the trading cycle low in Equities ran between December 7th and December 27th. As of the last update before Christmas I explained that we knew the oscillators were oversold, that the decline was stretched and with price moving into the end of the timing band that this low should ideally be seen this week. Otherwise, continued weakness beyond the end of this timing band would have dictated the alternative phasing, with the trading cycle low having been seen on December 10th. As it turns out, prices did rally and we have obviously seen the trading cycle low in accordance with our primary cyclical phasing of the trading cycle. Now, the expectation is for the advance out of this trading cycle low to be counter-trend and for it to be followed by another trading cycle down into the next trading and what should then be the intermediate-term cycle low. This expectation has been depicted in the last two weekend updates, per the light blue scenario. Please refer to the weekly chart in the last update. I will discuss this further in this next weekend s update. For now, we have a short-term buy signal in association with the trading cycle advance and until a daily swing high and downturn of the Primary Short-Term Indicators is seen, this buy signal and Copyright 2018 by Tim Wood 5
counter-trend advance will remain in force. Big Picture, the higher level setup and 4-year cycle top is in place. The short-term buy signal in Gold and the XAU remain intact, but with the intermediate-term cycle top due, this should ideally be the last trading cycle up into that top. If a weekly swing high and intermediate-term sell signal is seen in conjunction with the downturn out of the trading cycle top, then we will at that time have evidence of the intermediate-term cycle top. If not, then we likely have not seen the intermediate-term cycle top. As with Equities, we knew that conditions were ripe in Crude Oil for a short-term bounce, but also as with Equities it should be counter-trend and the existing intermediate-term sell signal remains in force. the The CRB Index had also moved to oversold levels, which made conditions ripe for a bounce and on Wednesday we saw the completion of a daily swing low and the triggering of a short-term buy signal. Here too, this should be a counter-trend advance that is followed by further weakness 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 December 21st, which has proven to have marked the trading cycle low. At present, the Dollar is again at risk of a left-translated trading cycle top in association with what should be the intermediate-term cycle top and decline into the intermediate-term cycle low. The short-term buy signal in Bonds remains intact, but Bonds 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. Copyright 2018 by Tim Wood 6
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
The Trading Cycle Oscillator in the upper window has turned above its trigger line. The Momentum indicator remains below its zero line, but has turned up in association with the advance out of the trading cycle low. The 5 3 3 stochastic in the middle window turned up from oversold levels in association with the advance out of the trading cycle low as well. The first of our Primary Short-Term Indicators is the New High/New Low Differential, plotted with price, which has turned sharply higher in association with the trading cycle low. The Trend Indicator remains below its trigger line. Copyright 2018 by Tim Wood 8
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, we knew that the trading cycle low should have been at hand, which has proven to have been the case and now the advance out of the trading cycle low will remain intact until another daily swing high and downturn of ALL Three of the Primary Short-Term Indicators is seen. Copyright 2018 by Tim Wood 9
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
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 negative. The Ratio Adjusted McClellan Oscillator has turned above its trigger line, which is also indicative of the trading cycle low. Once another short-term sell signal and crossing below the trigger line is seen, the trading cycle top should be in place. I would ideally like to see this indicator move back up to or above the zero line before a sell signal is re-triggered. The price/oscillator behavior here is going to be important and I will discuss that once we begin to see evidence of the trading cycle top. Copyright 2018 by Tim Wood 11
Next is the Smoothed McClellan Oscillator, which remains below its trigger line. Copyright 2018 by Tim Wood 12
The Accumulation/Distribution Index has also turned up in association with the advance out of the trading cycle low. Here too, I would like to see this indicator move higher and then once it turns back down we should be at or near 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. I will discuss more about the intermediate-term cycle low in the weekend update. 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 and that the decline into the 4-year cycle low is under way. While we have a short-term bounce at hand, the risk remains high. Copyright 2018 by Tim Wood 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 5 3 3 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 5 3 3 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. The oscillator picture remains at overbought levels, which makes conditions ripe for a top. But, 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 counter-trend and we should be approaching the intermediate-term cycle top with this trading cycle advance. Therefore, the pending intermediate-term top 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. 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 Friday if 1,282.30 is not bettered and if 1,267.40 is violated. Copyright 2018 by Tim Wood 14
Our daily chart of the XAU is next. With all of the price action since December 19th having occurred within the December 19th broad price bar, there have been no changes. As with Gold, the short and intermediateterm buy signals stand, but the expectation continues to be that it is a counter-trend advance. Also as with Gold, the XAU should be nearing the trading cycle top, if that top wasn t seen in conjunction with the December 19th high. Regardless, once the trading cycle top is confirmed with the triggering of a short-term sell signal, if the decline into the trading cycle low completes the formation of a weekly swing high, then upon such development we will have the makings of the counter-trend top. 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 15
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 5 3 3 Stochastic Daily Indicator Summary Short-Term Neutral Primary Indicators Formation of a Daily Swing High Cycle Turn Indicator (CTI) Confirming Indicators Trend Indicator (TI) Cycle Momentum Indicator Secondary Indicators 5 3 3 Stochastic The timing band for the current trading cycle low ran between December 14th and December 28th. In the last update I explained that given the completion of a daily swing low on December 21st, the evidence was suggestive of the trading cycle low having occurred on December 20th. As a result of the short-term buy signal on December 26th, every indication is that this was in fact the case. We have also known that the higher degree intermediate-term cycle top is due, which in turn suggests that 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. Given the completion of a daily swing high on Thursday, this trading cycle advance is already at risk of having run its course. Any further weakness that turns the daily CTI down will trigger a short-term sell signal, which will be suggestive of a failed and left-translated trading cycle top. Until we see evidence to the contrary of this being a left-translated trading cycle, the assumption with regard to the intermediate-term cycle top and the decline into the intermediate-term cycle low with one more trading cycle down, stands. Copyright 2018 by Tim Wood 16
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 5 3 3 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 5 3 3 Stochastic The last trading cycle low occurred on December 13th. The advance out of that low remains intact, but the oscillator picture has weakened and Bonds remain at risk of a left-translated trading cycle top. In order to prevent a left-translated trading cycle top from taking hold we simply have to see higher prices above the December 16th high, which ideally needs to carry price well into next week. Otherwise, any further weakness that triggers a short-term sell signal will be suggestive of a left-translated trading cycle top, which will in turn be suggestive of the intermediate-term cycle top. For now, the short-term buy signal continues to hold, but with the daily CTI negative, a move below the December 26th low without first bettering the December 26th high will complete the formation of a daily swing high, which will trigger a short-term sell signal. Copyright 2018 by Tim Wood 17
Crude Oil Per the last update, we knew that Crude Oil had moved to oversold levels, which made conditions ripe for a bounce. As with Equities and the CRB Index, Crude Oil also completed the formation of a daily swing low on Wednesday that was confirmed by an upturn of the daily CTI, which triggered a short-term buy signal. Also as with Equities and the CRB, this is expected to be a counter-trend advance, but it will remain intact until another daily swing high and downturn of the daily CTI is seen. With the advance out of the November low also having triggered an intermediate-term buy signal, the assumption continues to be that it marked an intermediate-term cycle low, which has since failed, and that lower prices into the next intermediate-term cycle low are expected in association with the decline into the seasonal and 3-year cycle low. For this reason, this anticipated bounce is expected to be counter-trend. Thursday was an inside day that reversed lower and based on the downside reversal, it is possible this bounce has already run its course. But, we have to have a daily swing high as evidence to that effect. A daily swing high will be completed on Friday if 47.00 is not bettered and if 42.52 is violated. 2018 Cycles News & Views; All Rights Reserved timwood1@cyclesman.com Copyright 2018 by Tim Wood 18