The Cyclical Trend Index (CTI) is the cornerstone of the Market Edge timing model. It is based on a technical application known as "Cyclical Analysis". The underlying premise of "Cyclical Analysis" is that the market, as measured by the Dow Jones Industrial Average (DJIA), tends to move in cycles that often resemble sine waves, a basic cycle which determines much of the motion in the universe.

The utilization of sine waves in market forecasting is based on studies that demonstrate that stocks, and in particular the DJIA, tend to experience price reversals at anticipated time intervals. These intervals, referred to as cycles, consist of the price movement of the DJIA from a significant LOW to an identifiable HIGH, followed by a retreat to a recognizable LOW. "Cyclical Analysis" systematically determines the beginning and ending points of these various cycles enabling the user to accurately time purchases and sales for maximum profit.

The Cyclical Trend Index has a twenty-one year history during which time it has accurately forecasted the market's direction with eighty percent accuracy. Actual and Projected readings of the Cyclical Status of the market are calculated on a weekly basis. Plus 1 to +17 are Bullish Readings while 0 to - 17 are Bearish.

To picture how these cycles influence price direction, visualize the stock market as a piece of elastic that is constantly subjected to positive or negative forces that exert pressure in the same or opposite directions. These forces are the five cycles that are incorporated in the CTI. The following table classifies each CYCLE by it's average time duration:

Ideally, each cycle exerts upward pressure at the beginning of its time frame and continues to do so until it is one-half completed. At this point, the process is reversed resulting in negative pressures being applied to the market. When dealing with five cycles, the picture can become confusing. Two cycles may be in an UP posture, while one may be FLAT, and the remaining two may be pointing DOWN. In order to have a collective Positive or Negative picture of the state of the market, each cycle must be evaluated in such a way as to total their independent, positive or negative forces. This is done by assigning each cycle either a positive or negative numerical value based upon the amount of time that has elapsed since it's previous bottom. The sum of these + or - values is called the "CYCLICAL TREND INDEX" (CTI). This indicator reduces the cyclical status of the market to an absolute, numerical value and is a powerful tool in determining the future direction of the market. CTI readings of +1 to +21 indicate a "Bullish" trend in the market, whereas a 0 to -21 value signals a downward, "Bearish" scenario.

The major problem that can arise when employing "Cyclical Analysis" in forecasting the market is the determination of starting points for the various cycles. Errors in assigning an accurate count can lead to aborted readings and adverse results. This problem can occur when identifying a cycle's low and is most pronounced when more than one of the cycles are due to make a bottom. In order to rectify this problem, both a Momentum Index and a Sentiment Index have been developed and are used in conjunction with the Cyclical Trend Index to refine the Market Timing Model.