Short-term Forecast for April 9, 2012

| April 9, 2012

Cyclical Trend Sell Signal has been Confirmed

A Cyclical Trend Score (CTS) sell signal window formed in August 2011 during an extremely volatile bottoming process, after which the current uptrend from October commenced. As dictated by our Cyclical Trend Trading System rules, a potential sell signal remains in effect until it is either confirmed or invalidated. Today, the S&P 500 index closed well below uptrend support at the lower boundary of the uptrend from October, generating a confirmed cyclical trend sell signal.

The sell signal indicates that the developing high is a likely cyclical trend inflection point. The formation of a cyclical top would be confirmed by a close below the October low sometime during the next several months.

S&P 500 Index Daily Chart Analyses

The following technical and cycle analyses provide short-term forecasts for the S&P 500 index. For intermediate-term outlooks see the latest intermediate-term forecast and for long-term outlooks see the latest long-term forecast.

Technical Analysis

The index closed sharply lower today, breaking well below support at the lower boundary of the uptrend from October 2011. Technical indicators are moderately bearish overall, favoring a continuation of the decline from last week.

Cycle Analysis

We are 23 trading days into the cycle following the short-term cycle low (STCL) on March 6. The move below the last beta low (BL) during the beta phase decline indicates that cycle translation is in question. The window during which the next STCL is likely to occur is from April 16 to May 7, with our best estimate being in the April 17 to April 23 range.

  • Last STCL: March 6, 2012
  • Cycle Duration: 23 trading days
  • Cycle Translation: Right (bullish)
  • Next STCL Window: April 16 to May 7; best estimate in the April 17 to April 23 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Short-term Outlook

  • Bullish Scenario: A rebound and close above the recent high near 1,419 would reconfirm the uptrend from October and forecast additional gains.
  • Bearish Scenario: A close below current levels would predict a return to congestion support in the 1,345 area.

The bearish scenario is more likely (~70% probable).

US 10-year Treasury Note Yield Daily Chart Analyses

The following technical and cycle analyses provide short-term forecasts for the 10-year Treasury note yield. For intermediate-term outlooks see the latest intermediate-term forecast and for long-term outlooks see the latest long-term forecast.

Technical Analysis

Yields closed sharply lower again today, moving down to a new short-term low well below congestion support in the 2.10% area. Technical indicators are moderately bearish overall, favoring a continuation of the decline from March.

Cycle Analysis

We are 14 trading days into the cycle following the short-term cycle high (STCH) on March 19. The sharp decline today suggests that the corrective phase of the current cycle is still in progress, although it is also possible that a new STCH formed on April 3. A move above the last STCH during the rally phase of the current cycle would reconfirm right translation and favor additional short-term strength. Alternatively, a return to the last alpha low (AL) during the current decline would signal a likely transition back to left translation. The window during which the next STCH is likely to occur is from April 10 to May 1, with our best estimate being in the April 18 to April 24 range.

  • Last STCH: March 19, 2012
  • Cycle Duration: 14 trading days
  • Cycle Translation: Right (bullish)
  • Next STCH Window: April 10 to May 1; best estimate in the April 18 to April 24 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Short-term Outlook

  • Bullish Scenario: A rebound and close above the recent short-term high near 2.28% would confirm the break above congestion resistance in the 2.25% area and predict a return to the previous short-term high near 2.38%.
  • Bearish Scenario: A close below current levels would forecast a move down toward congestion support in the 1.90% area.

The bearish scenario is more likely (~70% probable).

US Dollar Index Daily Chart Analyses

The following technical and cycle analyses provide short-term forecasts for the US dollar index. For intermediate-term outlooks see the latest intermediate-term forecast and for long-term outlooks see the latest long-term forecast.

Technical Analysis

The index closed moderately lower today, retreating from resistance at the upper boundary of the downtrend from January and returning to the congestion zone in the 79.60 area. Technical indicators are neutral to slightly bullish overall, suggesting that direction is in question with a slight upward bias.

Cycle Analysis

We are 4 trading days into the cycle following the short-term cycle low (STCL) on April 2. A weak alpha phase rally followed by a quick return to the last STCL would suggest that cycle translation is in question. Alternatively, a move above the last beta high (BH) during the alpha phase rally would reconfirm right translation and favor additional short-term strength. The window during which the next STCL is likely to occur is from April 27 to May 11, with our best estimate being in the May 2 to May 8 range.

  • Last STCL: April 2, 2012
  • Cycle Duration: 4 trading days
  • Cycle Translation: Right (bullish)
  • Next STCL Window: April 27 to May 11; best estimate in the May 2 to May 8 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Short-term Outlook

  • Bullish Scenario: A close above downtrend resistance near 80.15 would forecast a return to the recent short-term high at 80.57.
  • Bearish Scenario: A close well below uptrend support at 78.90 would predict a return to previous lows of the downtrend from January near 78.30.

The bullish scenario is slightly more likely (~60% probable).

Gold Daily Chart Analyses

The following technical and cycle analyses provide short-term forecasts for the gold market. For intermediate-term outlooks see the latest intermediate-term forecast and for long-term outlooks see the latest long-term forecast.

Technical Analysis

Gold closed moderately higher again today, reacting further off of recent short-term lows of the downtrend from late February. Technical indicators remain moderately bearish overall, favoring a continuation of the decline.

Cycle Analysis

The move higher today indicates that the latest short-term cycle low (STCL) likely occurred on April 4. A weak alpha phase rally followed by an extended alpha phase decline that moves below the last STCL would reconfirm left translation and favor additional short-term weakness. Alternatively, an extended alpha phase rally that moves well above the last beta high (BH) would suggest that cycle translation is in question. The window during which the next STCL is likely to occur is from April 23 to May 3, with our best estimate being in the April 24 to April 30 range.

  • Last STCL: April 4, 2012
  • Cycle Duration: 2 trading days
  • Cycle Translation: Left (bearish)
  • Next STCL Window: April 23 to May 3; best estimate in the April 24 to April 30 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Short-term Outlook

  • Bullish Scenario: A close well above downtrend resistance at $1,660 would predict a move up toward the recent short-term high near $1,690.
  • Bearish Scenario: A reversal and close below the recent short-term low near $1,622 would reconfirm the downtrend from late February and predict a move down to congestion support at the $1,600 level.

The bearish scenario is slightly more likely (~60% probable).

Gold Currency Index Daily Chart Analysis

The Gold Currency Index (GCI) is a composite of gold prices in the currencies of 10 of the largest economies in the world as defined by GDP. It is therefore currency independent, reflecting the intrinsic value of gold as an international currency itself.

Technical Analysis

The GCI closed moderately higher today, reacting further off of recent short-term lows and approaching resistance at the upper boundary of the downtrend from late February. Technical indicators remain moderately bearish overall, favoring a continuation of the decline.

Short-term Outlook

  • Bullish Scenario: A close above congestion resistance in the 41.60 area would predict a move up to congestion resistance at the 42.50 level.
  • Bearish Scenario: A reversal and close below the recent short-term low near 40.50 would reconfirm the downtrend from late February and forecast a move down to congestion support in the 39.60 area.

The bearish scenario is slightly more likely (~60% probable).

Oil Daily Chart Analyses

The following technical and cycle analyses provide short-term forecasts for the oil market. For intermediate-term outlooks see the latest intermediate-term forecast and for long-term outlooks see the latest long-term forecast.

Technical Analysis

Oil closed slightly lower today, continuing a test of support at the lower boundary of the uptrend from October 2011. Technical indicators are moderately bearish overall, favoring a continuation of the decline from late February.

Cycle Analysis

We are 5 trading days into the cycle following the short-term cycle low (STCL) on March 30. The beta low (BL) is imminent and may have formed today, although we would need to see renewed strength or additional sideways consolidation during the next session to confirm that development. A weak beta phase rally followed by an extended beta phase decline would reconfirm left translation and favor additional short-term weakness. Alternatively, an extended beta phase rally that moves well above the last alpha high (AH) would suggest that cycle translation is in question. The window during which the next STCL is likely to occur is from April 19 to May 3, with our best estimate being in the April 19 to April 25 range.

  • Last STCL: March 30, 2012
  • Cycle Duration: 5 trading days
  • Cycle Translation: Left (bearish)
  • Next STCL Window: April 19 to May 3; best estimate in the April 19 to April 25 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Short-term Outlook

  • Bullish Scenario: A rebound and close above downtrend resistance near $107.10 would predict a return to the recent high near $109.70.
  • Bearish Scenario: A close well below uptrend support near $101.50 would reconfirm the downtrend from February and forecast a move down toward congestion support at the $96 level.

The bearish scenario is slightly more likely (~60% probable).

Category: Forecasts, Short-term Forecasts


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