cycle turn indicator direction and swing summary of select ...€¦ · with the less dominant...

Cycle Turn Indicator Direction and Swing Summary

of Select Markets as of the close on

April 21,2020

*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

Market Daily CTI

Daily Swing

Weekly CTI

Weekly Swing

Industrial Negative High Positive HighTransports Negative High Positive Low

NDX Negative High Positive LowS&P Inverse Fund Positive N/A * Negative High

CRB Index Negative High Negative HighGold Negative High Negative HighXAU Negative High Positive Low

Dollar Positive Low Positive LowBonds Positive Low Negative Low

Crude Oil Negative High Negative HighUnleaded Negative High Negative High

Natural Gas Positive Low Positive Low

© Copyright 2020 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.

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http://www.cyclesman.info/New%20Subscriber%20Info.htm

April 21, 2020

Stocks

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The price action on Monday completed the formation of a daily swing high on the Industrials and on Tuesday we saw the marginal triggering of a short-term sell signal. A signal is a signal, but given the marginal downturn of two of the Primary Short-Term Indicators, I would like to see this signal confirmed with a convincing close below Tuesday’s low. With the less dominant half-trading cycle averaging 19 trading days, this short-term sell signal should prove to have marked the half-trading cycle top. Based on

End of Week Intermediate-Term Indicator Summary Intermediate-Term Neutral Primary Indicators Formation of a Weekly Swing Low BullishCycle Turn Indicator (CTI) BullishCTI on Rydex Tempest Fund * BearishConfirming IndicatorsTrend Indicator (TI) BearishAdvance/Decline Issues Diff BearishNew High New Low Diff BullishSecondary Indicators

5 3 3 Stochastic BullishCycle Momentum Indicator Bullish*When this indicator is Bullish it is negative for the market and visa versa.

Daily Indicator Summary Short-Term Sell/NeutralPrimary Indicators Formation of a Daily Swing High BearishCycle Turn Indicator (CTI) BearishSlow Cycle Turn Indicator (CTI) BearishNew High/New Low Differential BearishConfirming IndicatorsTrend Indicator (TI) BullishMcClellan Intermediate Term Breadth Momentum Oscillator (ITBM)

Bearish

McClellan Intermediate Term Volume Momentum Oscillator (ITVM)

Bearish

McClellan Summation Index BullishMcClellan Volume Summation Index Bearish

Secondary Short Term Indicators5 3 3 Stochastic BearishCycle Momentum Indicator BearishTrading Cycle Oscillator BearishMomentum Indicator BearishRatio Adjusted McClellan Oscillator Crossover

Bearish

Accumulation/Distribution Index Bearish


the higher degree structure and expectation that the advance out of the March 23rd trading cycle low should prove to be a counter-trend advance, this short-term sell signal is also an opportunity to cap the trading cycle top as well as the overall counter-trend advance. We now have to see what this short-term sell signal yields. More on that as this develops.

The sell signals on Crude Oil and the CRB Index remain intact. I began warning of the deflationary pressures and downturn out of the 6th economic cycle, per the Raw Materials data, over a year ago as that longer-term setup began taking hold. Following the 3-year cycle low in commodities, which was seen in the December 2018 to January 2019 timeframe, I warned that we were not seeing a re-inflation of the economy. I explained that the left-translated 3-year cycle advances we saw early last year were reflective of lower overall commodity prices, which included Crude Oil and Gold. The CRB Index is now at 1972 levels and Crude Oil is at 1986 levels. No question about it, Gold has been the holdout, but I remind you that the expectation for lower Gold prices is also based on the historical relationship with the Raw Materials and JOC data. I also want to stress that based on the underlying structure of Equities and the expectation for Gold, I maintain that the risk potential is just as high as what has been seen with the CRB and Crude Oil. Just because Gold as held up and Equities have bounced, don’t think the risk does not exist. The short-term buy signal on the Dollar remains intact and we must see this trading cycle carry the Dollar higher in association with a right-translated trading cycle advance if the higher degree intermediate-term structure is going to remain positive. The advance out of the trading cycle low in Bonds remains intact and here too, the advance out of this trading cycle low must carry Bonds higher in association with a right-translated trading cycle in order to keep the intermediate-term structure alive. The trading cycle top was seen in Gold on April 14th and the expectation is to see a trading cycle low this week. However, Gold is again at risk of a left-translated intermediate-term cycle top, which if it bites will leave Gold set up for the higher degree cycle top/s. Stay tuned for further developments.


The red intermediate-term Advancing issues line is tied to the intermediate-term cycle. Because of the overall cyclical phasing, I tend to think that the recent upturn may prove to be similar with that seen into November 2018, before the next leg down resumed. The downturn of this indicator in conjunction with the triggering of a short-term sell signal, is now suggestive of the trading cycle top. Next, we need to see a crossing below the trigger lines and the triggering of an intermediate-term sell signal.


The Trading Cycle Oscillator in the upper window continues turning down from overbought levels as does the Momentum indicator. The 5 3 3 stochastic in the middle window continues to weaken as well. The downturns out of overbought and divergent tops continue to be suggestive of the trading cycle top. The first of our Primary Short-Term Indicators is the New High/New Low Differential, plotted with price, which ticked ever so slightly down on Tuesday. The Trend Indicator remains above its trigger line in association with the upturn out of the trading cycle low. Another downturn by this indicator should serve to confirm the trading cycle top.


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 action on Monday completed the formation of a daily swing high and the additional weakness on Tuesday put ALL Three of the Primary Short-Term Indicators into gear to the downside, which triggered a short-term sell signal. I would like to see a more convincing downturn of the Slow Cycle Turn Indicator and and the NYSE New High/New Low Differential, in conjunction with a solid close below Tuesday’s low as further confirmation of this sell signal. Nonetheless, we do have a sell signal now in place, which is the first step in capping the counter-trend advance. We now need to see the completion of a weekly swing high and re-triggering of an intermediate-term sell signal.


Both the Intermediate Term Volume Momentum Oscillator and the Intermediate Term Breadth Momentum Oscillator have turned below their trigger lines, which is also suggestive of the trading cycle top.


The McClellan Summation Index is flat while the McClellan Volume Summation Index has ticked down. I would also like to see a more decisive turn here as further confirmation of the short-term sell signal. The Ratio Adjusted McClellan Oscillator has turned back down and is sitting right on its zero line. Any further weakness that carries it below the zero line will also serve to further confirm the short-term sell signal.


In this case, we have seen a marginal downturn below the trigger line, which is suggestive of the the trading cycle top. However, as with many of the other indicators, we need to see a more decisive downturn as further confirmation of Tuesday’s short-term sell signal.


The Accumulation/Distribution Index remains below its trigger line and overall, the evidence is suggestive of the anticipated top, which we will assume to be in place until proven otherwise. With that said, as you can see, the overall oscillator picture in association with this sell signal was marginal and for that reason we do need to see a solid close below Tuesday’s low in order to further confirm this sell signal, which in doing so should give us a more convincing oscillator picture as well. t


Gold

The April 15th short-term sell signal remains intact. The timing band for the pending trading cycle low runs between April 9th and April 23rd. Based on the oscillator picture as of this past weekend, the expectation was to see further weakness into this week, which we have seen. Based on the oscillator picture, I would still like to see another day or so down, but once a daily swing low and upturn of the daily CTI are seen, this low should be in place. Structurally, we also now have a weekly swing high in the making. More on that once we see what the weekly close brings. Further evidence of the intermediate-term cycle top will follow if the advance out of the pending trading cycle low fails to better the current trading cycle top and/or if the trading cycle advance peaks with a left-translated structure. A daily swing low will be completed on Wednesday if 1,666.20 holds and if 1,718.00 is bettered. In the meantime, we have a short-term sell signal in place and this trading cycle top puts Gold at risk of the higher degree cycle tops. Stay Tuned!

End of Week Intermediate-Term Indicator Summary Intermediate-Term Buy/Neutral

Primary Indicators

Formation of a Weekly Swing Low BullishCycle Turn Indicator (CTI) BullishConfirming IndicatorsTrend Indicator (TI) BullishCycle Momentum Indicator BullishSecondary Indicators

5 3 3 Stochastic Bullish

Daily Indicator SummaryShort-Term Sell

Primary Indicators

Formation of a Daily Swing High BearishCycle Turn Indicator (CTI) BearishConfirming IndicatorsTrend Indicator (TI) BullishCycle Momentum Indicator BearishSecondary Short Term Indicators

5 3 3 Stochastic Bearish


Our daily chart of the XAU is next. Thus far, we have not seen much head way following Friday’s short-term sell signal, but as with Gold, the trading cycle top should be in place. Here too, I would ideally like to see further weakness into the trading cycle low, but once a daily swing low and upturn of the daily CTI are seen, this low should be in place.


Dollar

No changes with the Dollar. The timing band for the current trading cycle low ran between April 2nd and April 16th. With the price action on April 15th completing the formation of a daily swing low, which was also confirmed by an upturn of the daily CTI, a short-term buy signal was triggered. With this short-term buy signal having occurred at a level above the March 27th daily swing low, along with the fact that we have moved through this timing band, the evidence is further suggestive of the low having been seen early, on March 27th. The issue with this is that we must see this trading cycle unfold with a right-translated structure if the higher degree intermediate-term structure is to remain positive. Therefore, we must see this trading cycle advance carry price above the April 6th high. Thus far, the short-term buy signal remains in force, which continues to give the Dollar the opportunity to move higher. This remains a critical cyclical juncture and the current trading cycle is key! A daily swing high will be completed on Wednesday if 100.63 is not bettered and if 100.03 is violated.

End of Week Intermediate-Term Indicator Summary Intermediate-Term Buy/Neutral

Primary Indicators Formation of a Weekly Swing Low BullishCycle Turn Indicator (CTI) Bearish

Confirming IndicatorsTrend Indicator (TI) Bullish

Cycle Momentum Indicator BearishSecondary Indicators5 3 3 Stochastic Bearish

Daily Indicator SummaryShort-Term Buy

Primary Indicators Formation of a Daily Swing Low BullishCycle Turn Indicator (CTI) Bullish

Confirming IndicatorsTrend Indicator (TI) Bearish

Cycle Momentum Indicator BullishSecondary Indicators5 3 3 Stochastic Bullish


Bonds

The timing band for the trading cycle low runs between April 8th and April 29th. The price/oscillator picture had ripened for this low and every indication has been that this low was seen on April 14th. Monday was an inside day and further strength followed on Tuesday as this trading cycle advance presses higher. However, in order to prevent the completion of a left-translated intermediate-term cycle top, the advance out of this trading cycle low must now unfold with a right-translated structure. Otherwise, Bonds will be at risk of the intermediate-term cycle top, which will in turn be suggestive of the higher degree cycle top/s. This remains a critical juncture for Bonds and for now we have a short-term buy signal in place. More on this as it develops.

End of Week Intermediate-Term Indicator Summary Intermediate-Term SellPrimary Indicators Formation of a Weekly Swing High BearishCycle Turn Indicator (CTI) BearishConfirming IndicatorsTrend Indicator (TI) BullishCycle Momentum Indicator BearishSecondary Indicators5 3 3 Stochastic Bullish

Daily Indicator SummaryShort-Term BuyPrimary Indicators Formation of a Daily Swing Low BullishCycle Turn Indicator (CTI) BullishConfirming IndicatorsTrend Indicator (TI) BearishCycle Momentum Indicator BullishSecondary Short Term Indicators5 3 3 Stochastic Bearish


Crude Oil

On April 14th a short-term sell signal was triggered. Because of the ongoing higher degree intermediate-term sell signal and the accompanying structure, we knew that while Crude Oil was at the time operating within a consolidation range, it was also positioned for continued weakness in association with the higher degree cycles. I remind you that the expectation of lower Crude Oil prices has been based on not only that structure, but also the historical relationship with the Raw Materials and JOC data. Obviously, this all proved correct and now Crude Oil is sitting at 1986 levels. There will be bounces along the way, but because the higher degree 3-year cycle low still lies well ahead, the expectation continues to be for lower overall prices until we move into that higher degree cycle low. After having seen the carnage in Crude Oil, I hope that you will take heed to the same historical relationships and the associated risks that I have repeatedly warned about with Gold as well as the ongoing longer-term structural risks with Equities! As for Crude Oil, the April 17th short-term sell signal will continue to stand until a daily swing low and upturn of the daily CTI are seen.

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