Cycle Turn Indicator Direction and Swing Summary of Select ...€¦ · trading cycle low. If we see...

Cycle Turn Indicator Direction and Swing Summary

of Select Markets as of the close on

February 27,2020

*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 Negative HighTransports Negative High Negative High

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

CRB Index Negative High Negative HighGold Negative Low Positive LowXAU Negative High Negative Low

Dollar Negative High Negative HighBonds Positive Low Positive Low

Crude Oil Negative High Negative HighUnleaded Negative High Negative High

Natural Gas Negative High Negative High

© 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.

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.


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

February 27, 2020

Stocks

The expectation all along has been that the structural setup in association with this top would be subtle and that the break would come seemingly out of nowhere. With that said, as this bubble expanded increasingly higher, I have made the comment hundreds of times that structure was key. As Equities moved out of the January 31st trading and intermediate-term cycle lows we have watched the structure in association with this setup take form and because we understood the structure, we knew exactly what was happening, per the February Research Letter, as well as the short-term updates that followed, particularly last weekend’s short-term update. Anyway, in the process of this setup and Monday’s break, structure has certainly proven to be key! Short-term, this decline is oversold and we have a half-trading cycle low due, both of which make a bounce possible. However, as you can see from the failed intraday recoveries on both Wednesday and Thursday, the personality of the market has changed, which is a result of the structural break and the corresponding change that has occurred. Whether the market can bounce here out of the half-trading cycle low and if so, how much, I don’t know. What I do know, is that the longer-term structure has broken and for

End of Week Intermediate-Term Indicator Summary Intermediate-Term Sell Primary Indicators Formation of a Weekly Swing High BearishCycle Turn Indicator (CTI) BearishCTI on Rydex Tempest Fund * BullishConfirming IndicatorsTrend Indicator (TI) BullishAdvance/Decline Issues Diff BearishNew High New Low Diff BearishSecondary Indicators

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

Daily Indicator Summary Short-Term SellPrimary 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) BearishMcClellan Intermediate Term Breadth Momentum Oscillator (ITBM)

Bearish

McClellan Intermediate Term Volume Momentum Oscillator (ITVM)

Bearish

McClellan Summation Index BearishMcClellan 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


that reason any bounce should prove to be counter-trend and followed by lower prices. I will be working on the March Research Letter this next week and will get it out the following weekend. I’ll have more in depth updates at that time. For now, understand that the structural setup and break seen on Monday is suggestive of the higher degree cycle top/s.

The short-term sell signals in both Crude Oil and the CRB Index remain intact. As a result of the higher degree seasonal cycle tops, the expectation has been for the advance out of the recent trading cycle lows to be counter-trend, which has proven correct. Both Gold and the XAU triggered short-term sell signals on Tuesday and while Gold has not yet begun to turn down into the trading cycle low, the XAU has and the trading cycle tops should be in place. At a higher level, I maintain that the strength in Gold has been in association with the advance into the 9-year cycle top. Once an intermediate-term sell signal is re-triggered, the opportunity for those higher degree cycle tops in Gold and the XAU will once again be at hand. If that is correct, this will then leave Gold set up for the same liquidation we have begun to see in most all other asset classes. The short-term sell signal on the Dollar remains intact and we have seen the additional weakness that we needed to see to carry it into the early side of the timing band for this low. Once a daily swing low and upturn of the daily CTI are seen, a short-term buy signal will be triggered and this low should be in place. The advance out of the trading and intermediate-term cycle low in Bonds continues pressing higher and the advance this week has served to confirm that the higher degree seasonal cycle low has in fact been seen. As a result, our expectation of lower rates on the back of an increasingly weak economy has also proven correct. That said, Bonds are moving into a short-term trading cycle top.

The red intermediate-term Advancing issues line is tied to the intermediate-term cycle, which has now undercut its May 31st low. In doing so, it is confirming the left-translated intermediate-term cycle and the collective evidence with regard to the higher degree cycle top/s.


The Trading Cycle Oscillator in the upper window remains below its trigger line and has moved to deeply oversold levels, as has the Momentum indicator, which is also plotted in the upper window. The 5 3 3 stochastic in the middle window has moved to deeper oversold levels as well, which also makes conditions ripe for a bounce, which cyclically should only be in association with the less dominant half-trading cycle low. The first of our Primary Short-Term Indicators is the New High/New Low Differential, plotted with price, which remains negative. The Trend Indicator remains negative.


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 February 18th short-term sell signal remains intact and regardless of the oversold conditions, it will continue to do so until a daily swing low and upturn of the Primary Short-Term Indicators are seen.


Both the Intermediate Term Volume Momentum Oscillator and the Intermediate Term Breadth Momentum Oscillator remain below their trigger lines.


Both the McClellan Summation Index and the McClellan Volume Summation Index turned down last week and they continue to weaken in association with the sell signal and decline. The Ratio Adjusted McClellan Oscillator has moved to increasingly oversold levels, which makes conditions ripe for a bounce. I said here in the Tuesday night update that my suspicion was that a more meaningful bounce was at that time still a few days ahead. We have certainly seen more weakness and this market is certainly oversold, which certainly makes conditions ripe for a bounce. But, regardless of when a bounce takes hold, because of the current cyclical phasing and the structural damage we have seen, any advance should be counter-trend and lower prices should follow in association with the decline out of the higher degree cycle top/s.


The Smoothed McClellan Oscillator crossed below its trigger line last week, which was also suggestive of the trading cycle top. As stated here in the weekend update, we knew if this proved to be a left-translated trading cycle top that it would also be suggestive of the higher degree cycle top/s, which it has. Thus far, this indicator also remains negative.


The Accumulation/Distribution Index continues to weaken and in doing so has also moved to increasingly oversold levels, which one would think is indicative of a bounce.


Gold

The price action on Thursday completed the formation of a daily swing low, but then price reversed off of the highs. In the process, Tuesday’s short-term sell signal remains intact and the timing band for the next trading cycle low runs between March 3rd and March 17th. With this short-term sell signal in place and this timing band approaching, the trading cycle top should be in place and the decline into the trading cycle low should be underway. I maintain that Gold is flirting with the higher degree cycle tops as well, but we are again going to have to see the completion of a weekly swing high as evidence with regard to those higher degree cycle tops. For now, this short-term sell signal remains intact and it should carry Gold lower into the trading cycle low. If we see the completion of a weekly swing high and the triggering of an intermediate-term sell signal in association with the decline into the trading cycle low, then the higher degree cycle tops may be in place.

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

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 Low BullishCycle 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 and as with Gold, Tuesday’s short-term sell signal remains intact. In the case of the XAU, lower prices have followed and every indication is that the trading cycle top has been seen. The expectation is that this also marked the higher degree cycle tops as well and if the decline out of this trading cycle top completes the formation of a weekly swing high, along with the triggering of an intermediate-term sell signal, then we should have those higher degree cycle tops in place. For now, this short-term sell signal will remain intact until a daily swing low and upturn of the daily CTI are seen.


Dollar

The short-term sell signal and decline into the trading cycle low remains intact. The timing band for the now due trading cycle low runs between February 26th and March 11th. I said here in the Tuesday night update that I would ideally like to see a little more weakness into the end of this week or next, in association with the decline into this low. The additional weakness seen this week was a little more significant than I expected, but we have, nonetheless, seen the additional weakness that I was wanting to see. With the Dollar now having moved into this timing band and with this decline having moved to oversold levels, once a daily swing low and upturn of the daily CTI are seen, the trading cycle low should be in place. I will have more on the developments seen here this week in the weekend update. Because of the broad range on Tuesday, a daily swing low is not likely to be seen on Friday. What we need to see to set the Dollar up for the trading cycle low is an undercutting of Thursday’s low in association with a narrower price range. More on that as it develops.

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

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

Confirming IndicatorsTrend Indicator (TI) Bullish

Cycle Momentum Indicator BullishSecondary Indicators5 3 3 Stochastic Bullish

Daily Indicator SummaryShort-Term Sell

Primary Indicators Formation of a Daily Swing High BearishCycle Turn Indicator (CTI) Bearish

Confirming IndicatorsTrend Indicator (TI) Bearish

Cycle Momentum Indicator BearishSecondary Indicators5 3 3 Stochastic Bearish


Bonds

No change with Bonds as they continue pressing into their trading cycle top. We have known that the January 2nd low marked both the trading and higher degree intermediate-term cycle lows. We have also known that it ideally should have marked the seasonal cycle low as well, which with the completion of a monthly swing low, has in fact proven to have been the case. Therefore, the longer-term expectations for higher prices have been realized. Short-term, Bonds are approaching the timing band for the next trading cycle low and with this advance now having carried price to overbought levels, once a daily swing high AND downturn of the daily CTI are seen, the trading cycle top should be in place. Because of the higher degree cycle lows and structure of this trading cycle, the decline into the trading cycle low is expected to be counter-trend and higher prices should follow.

End of Week Intermediate-Term Indicator Summary Intermediate-Term BuyPrimary Indicators Formation of a Weekly Swing Low BullishCycle Turn Indicator (CTI) BullishConfirming IndicatorsTrend Indicator (TI) BullishCycle Momentum Indicator BullishSecondary Indicators5 3 3 Stochastic Bearish

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


Crude Oil

Monday’s short-term sell signal remains intact and because of the evidence of the higher level seasonal cycle top, the expectation was for the advance out of the February 4th low to be counter-trend. As a result of Monday’s short-term sell signal, every indication was that the counter-trend advance had run its course and on Wednesday we saw the February 4th trading cycle low violated, which was then followed by further weakness on Thursday. As I have explained all along, the expectation now is to see a violation of the 2018 3-year cycle low, just as we have seen in conjunction with all of the other commodity related indexes. This short-term sell signal will remain in force until a daily swing low and upturn of the daily CTI are seen. Until such time, lower prices are expected.

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Cycle Turn Indicator Direction and Swing Summary of Select ...€¦ · trading cycle low. If we see...

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