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Cycle News & Views
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April 30, 2003

I have titled this article “Crossroads” because of the current cyclical setup in the U.S. stock market, gold and the dollar. All of these markets are currently at very critical junctures. The direction of these markets in the near term will set the cyclical picture up for the intermediate term and we could see strong moves just ahead in each of these markets.

The Stock Market

Cyclically, we are working under the dark cloud of my seasonal cycle. This cycle last bottomed in October 2002 and thus far, the top is the December 2002 high.

If you believe, as I do, that the October low was not the 4-year cycle low, my seasonal statistics suggest a 97% probability of a decline below the October 2002 low if the current seasonal cycle can’t rally above the December 2^nd high after May 1, 2003.

If you think that October was the 4-year low, then my seasonal work still suggests a 73% probability of a decline below the October 2002 low if the current seasonal cycle can’t move above the December 2^nd high after May 1, 2003.

From the March 2003 low a new weekly cycle was born and the advance began. This advance has been weak and is now maturing.  The advance from the July bottom rose in what is called a rising wedge pattern, as did the advance off of the October low. Thus far the advance of the March bottom has risen in the exact same pattern.

	These patterns are bearish patterns in and of themselves. On top of that, the slope of each rising wedge has been less than the preceding one with this one being the weakest. It now appears that we are about to break down out of this rising wedge pattern.  At the same time, the 10-week cycle is due to top out soon and most all technical indicators are very over bought. A hard break here would also likely mark this top as the top for the larger 22-week cycle, which would then be setup with extreme left translation. This will then set the stage for even further weakness. I can assure you this is not a good combination of events for the bulls.
	The Dollar The Dollar made a weekly cycle low on March 7, 2003 at 97.62.  The problem is that this cycle is now deteriorating badly and it now appears that we should soon see a break below 97.62. If we do see a break below 97.62, the Dollar should then be under pressure for the remainder of the current weekly cycle. So, a break here would not be good news for the Dollar.
	Gold An intermediate term buy signal is near. When I bring gold into the mix, not only does the cyclical picture fit but, it’s outright ugly. The stock market appears to be topping at an intermediate term top. The Dollar is showing serious signs of weakness and appears to be on the brink of breaking through an intermediate term low. Gold is forming an intermediate term bottom and appears to be setting up for another advance. I expect to see a long signal within a couple of weeks and possibly sooner.

The point is that all of these cycles, which are all intermediate term or greater, are now setup for reversals. On top of that, the direction of the reversals confirm each other. It is my conclusion that the market is at a critical juncture and the condition is fragile at best. The details of these cyclical developments are covered in detail in my May newsletter.

© 2003 Tim W. Wood
charts courtesy of www.stockcharts.com 

The opinions expressed in this editorial are those of the author and are based upon information that is believed to be accurate and reliable, but are opinions and do not constitute a guarantee of present or future financial market conditions.

CAVEAT EMPTOR "Buyer Beware"

Tim W. Wood Bio & Archives

Tim W. Wood, CPA
Cycles News & Views
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