Cycle Turn Indicator Direction and Swing Summary of Select Markets as of the close on January 8, 2019 Market Daily CTI Daily Swing Weekly CTI Weekly Swing Industrial Positive Low Positive Low Transports Positive Low Positive Low NDX Positive Low 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 Negative High Negative High Bonds Negative High Positive Low Crude Oil Positive Low Positive Low Unleaded Positive Low Positive Low 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 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 5 3 3 Stochastic Cycle Momentum Indicator *When this indictor is it is negative for the market and visa versa. January 8, 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 5 3 3 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 remains intact and has carried price to short-term overbought levels by many measures. One of which, that seems to be getting a lot of attention all of the sudden, is the McClellan Oscillator. I use the Ratio Adjusted McClellan Oscillator, which has now moved to the most overbought reading since January 6, 2009. I have heard a lot of statistics being thrown around about how bullish these readings are and maybe we will see another market miracle in which that proves to be the case. But, here s the rest of the story. Fact is, the January 6, 2009 high was followed by a 28.8% decline into the March 6, 2009 4-year cycle low. Prior to 2009, we have to go back to August 26, 1982 to find as high of a reading and in that case it came in conjunction with the price advance immediately following the 4-year cycle low. There was also another similar reading on January 10, 1975 following the December 1974 4-year cycle low. Prior to that, similar readings were seen in January and October 1974, which were followed by the decline into the December 1974 4-year cycle low. Other such readings were seen in June 1970, which this time occurred in conjunction with the advance out of the 4-year cycle low. Moving further Copyright 2018 by Tim Wood 5
back in time, similar readings were also seen in July and November of 1962, following the June 4-year cycle low. In September 1940 similar readings were also seen and in this case slightly higher prices into November were seen, but were followed by the resumption of the decline into the 4-year cycle low. In 1938 there were similar readings both before and immediately following the 1938 4-year cycle low. Following the 1932 4-year cycle low and the 1933 seasonal cycle low, such readings were also seen. Jumping back to 1929, there was again another similar reading immediately following the November 1929 4-year cycle low. But, following the April 1930 4-year cycle top, 8 such readings were seen, some of which were followed by slightly higher prices, but all of which were ultimately followed by lower prices in association with the relentless decline into the 1932 4-year cycle low. Obviously, such Ratio Adjusted McClellan Oscillator readings are closely associated with 4-year cycle lows. And, as I explained in the January research letter, the evidence does in fact suggest that we are moving into the 4-year cycle low in conjunction with the next intermediate-term and seasonal cycle low. But, unless we saw another market miracle in conjunction with the December low, the collective evidence suggests that in the current case, these extreme McClellan readings should be preceding the continuation of the decline into the 4-year cycle low just as explained in the January letter. IF something else begins to develop here, then I promise you I will adjust my thinking once that evidence is seen. Until then, the current expectations stand. The risk here is very high and Extreme caution is advised! The short and intermediate-term buy signal in Gold remains intact, but we should ideally have the trading cycle top in place. The XAU triggered a short-term sell signal on Tuesday, but we need to see it further confirmed with a move below Tuesday s low. 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 and it is now looking as if the December low marked the intermediate-term cycle low rather than the November low. The short-term buy signal on the CRB Index also remains intact and here too, it is now looking as if the December low marked the intermediate-term cycle low. But, this should be a counter-trend advance that is followed by further weakness into the nesting of higher degree cycle lows. The Dollar continues to move into its trading cycle low and in association with the decline out of the intermediate-term cycle top. The decline out of the suspected trading cycle top remains intact on Bonds, but the trading cycle low is now approaching. 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 continues turning back up after having violated the October low. As a result of the violation of the October low, the evidence continues to point toward it having marked the intermediate-term cycle low. The green MA line remains 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 7
The Trading Cycle Oscillator in the upper window remains positive. The Momentum indicator turned below its zero line on Monday, but turned back up on Tuesday, which has formed a divergence. The 5 3 3 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 positive. The Trend Indicator has turned back up in association with the trading cycle low. 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, the expectation is that the advance out of the December 26th low is counter-trend, but the buy signal in association with this advance will remain intact until another daily swing high AND down turn 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 9
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 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 positive in association with their upturn out of the trading cycle low. I had said before that I wanted to see the Ratio Adjusted McClellan Oscillator move back up to the 30-40 range, which as discussed above, has been far exceeded. I think I covered this all in the opening paragraph, so there is nothing new to add here at this time. Copyright 2018 by Tim Wood 11
Next is the Smoothed McClellan Oscillator, which also remains above its trigger line in association with the upturn out of the trading cycle low. Copyright 2018 by Tim Wood 12
The Accumulation/Distribution Index remains above its trigger line and continues moving higher in association with the advance out of the trading cycle low. A downturn will be suggestive of the trading cycle top. In summary, the advance out of the trading cycle low remains intact, but short of another market miracle it should be counter-trend and there should be at least one more trading cycle down into the higher degree intermediate-term, seasonal and 4-year cycle low. For now, this short-term buy signal will continue to stand until a daily swing high AND downturn of ALL Three of the Primary Short-Term Indicators are seen. 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 evidence continues to be suggestive of the January 4th high having marked the trading cycle top, but we have not yet seen the triggering of a short-term sell signal as confirmation. The timing band for the next 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 the decline into the trading cycle low is at hand. Any further advance should be a retest or last push up into the trading cycle top while any further weakness below the January 4th low 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 Wednesday if 1,300.40 is not bettered and if 1,278.10 is violated. Copyright 2018 by Tim Wood 14
Our daily chart of the XAU is next. The price action on Tuesday completed the formation of a daily swing high that was confirmed by a downturn of the daily CTI, which triggered a short-term sell signal. 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. With price reversing off of the low on Tuesday we need to see this short-term sell signal further confirmed with a close below Tuesday s low. 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. As with Gold, any additional advance should be a retest or final push into the trading cycle top, whereas any additional weakness should serve to confirm that we have seen it. 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 Sell 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 We have been operating under the assumption that the trading cycle low was seen on December 20th and that we have a left-translated trading cycle at play in conjunction with the intermediate-term cycle top. We were waiting to see a little more confirmation that we weren t seeing a slightly long trading cycle and that the trading cycle low was in fact seen on December 20th. As a result of the price action this week, the evidence is further suggestive of this having been the case and the timing band for the next trading cycle low runs between January 14th and January 25th. With this trading cycle low falling on the early side of the timing band for the higher degree intermediate-term cycle low, it is possible to see the intermediate-term cycle low in conjunction with this next trading cycle low. The first indication to that effect will be the completion of a weekly swing low. More on that then. For now, the decline into the trading cycle low will remain in force until a daily swing low and upturn of the daily CTI are seen. 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 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 5 3 3 Stochastic As discussed in the January research letter, in light of the January 4th price reversal, the accompanying oscillator picture and the timing band for the trading cycle low, we knew that the trading cycle top should be close at hand, but we needed a daily swing high in order to confirm it. This was seen on Monday and with the daily CTI already negative, a short-term sell signal in association with the anticipated trading cycle top was seen. Ideally we should see a little more weakness into the timing band for this low that pulls the oscillators into oversold territory. 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 17
Crude Oil The December 26th short-term buy signal remains intact. This buy signal finally got a little traction and has now carried price to modestly overbought territory, per the 5 3 3 stochastic. Crude oil also completed the formation of a weekly swing low and triggered an intermediate-term buy signal last week. In doing so, the evidence now suggests that the intermediate-term cycle low was seen in conjunction with the additional trading cycle down into December rather than having occurred in conjunction with the November low. Regardless, this should ideally still be a counter-trend advance. Once a daily swing high is formed and confirmed by a downturn of the daily CTI, a short-term sell signal will be triggered and the resumption of the decline into the higher degree lows should follow. A daily swing high will be completed on Wednesday if 49.95 is not bettered and if 48.31 is violated. 2019 Cycles News & Views; All Rights Reserved timwood1@cyclesman.com Copyright 2018 by Tim Wood 18
Copyright 2018 by Tim Wood 19