Short-term Forecast for August 31, 2011

| August 31, 2011

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 weekly review, and for long-term outlooks see the latest big picture update.

Technical Analysis

The S&P 500 index reversed large early gains to close moderately higher today, moving up to a new high for the oversold reaction from early August. Technical indicators remain moderately bullish overall, favoring a continuation of the reaction.

Cycle Analysis

We are 17 trading days into the cycle following the short-term cycle low (STCL) on August 9. The window during which the next STCL is likely to occur is from September 19 to October 7, with our best estimate being in the September 20 to September 26 range.

  • Last STCL: August 9, 2011
  • Cycle Duration: 17 trading days
  • Cycle Translation: Right (bullish)
  • Next STCL Window: September 19 to October 7; best estimate in the September 20 to September 26 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 current levels would reconfirm the oversold reaction from early August and predict a move up toward strong congestion resistance at the 1,260 level.
  • Bearish Scenario: A quick reversal and close below congestion support near 1,175 would forecast a return to critical congestion support in the 1,120 area.

The bullish 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 weekly review, and for long-term outlooks see the latest big picture update.

Technical Analysis

Yields closed moderately higher today, moving up toward recent short-term highs of the oversold reaction from mid-August. Technical indicators are effectively neutral overall, suggesting that direction is in question.

Cycle Analysis

We are 12 trading days into the cycle following the short-term cycle high (STCH) on August 15. Cycle translation remains bearish and a close below the recent low after the formation of the next STCH would reconfirm left translation and forecast additional losses. Alternatively, a move well above the last STCH during the rally phase of the current cycle would suggest that cycle translation is in question. The window during which the next STCH is likely to occur is from September 6 to September 27, with our best estimate being in the September 6 to September 12 range.

  • Last STCH: August 15, 2011
  • Cycle Duration: 12 trading days
  • Cycle Translation: Left (bearish)
  • Next STCH Window: September 6 to September 27; best estimate in the September 6 to September 12 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 congestion resistance in the 2.30% area would reconfirm the oversold reaction from the mid-August and forecast additional gains.
  • Bearish Scenario: A close below the recent low near 2.07% would reconfirm the downtrend from February and forecast additional losses.

Both scenarios are equally likely at the moment.

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 weekly review, and for long-term outlooks see the latest big picture update.

Technical Analysis

The index closed moderately higher again today, reacting off of the lower boundary of the consolidation formation that has been developing since early May and beginning another test of resistance at the upper boundary of the downtrend from early July. A close well outside of the trading range between 73.50 and 76.20 will predict the direction of the next meaningful move with a high degree of statistical confidence. Technical indicators are neutral to slightly bearish overall, suggesting that direction is in question with a slight downside bias.

Cycle Analysis

We are 10 trading days into the cycle following the short-term cycle low (STCL) on August 17. The move higher today caused both price oscillators to experience bullish crossovers and a bullish engulf pattern formed on the daily chart, generating a cycle low signal that indicates the beta low (BL) likely formed on August 29. A move well above the alpha high (AH) of the previous cycle during the beta phase rally would suggest that cycle translation is in question. Alternatively, a brief rebound followed by a move below the last STCL during the beta phase decline would reconfirm left translation and forecast additional short-term losses. The window during which the next STCL is likely to occur is from September 13 to September 27, with our best estimate being in the September 14 to September 20 range.

  • Last STCL: August 17, 2011
  • Cycle Duration: 10 trading days
  • Cycle Translation: Left (bearish)
  • Next STCL Window: September 13 to September 27; best estimate in the September 14 to September 20 range.
  • Setup Status: Cycle low setup occurred today.
  • Trigger Status: Cycle low trigger occurred today.
  • Signal Status: Cycle low signal was generated today.
  • Stop Level: 73.50.

Short-term Outlook

  • Bullish Scenario: A close above downtrend resistance near 74.20 would predict a return to the recent short-term high at 75.10.
  • Bearish Scenario: A close well below trading range support at the 73.50 level would signal a likely move down to new long-term lows and forecast additional losses.

Both scenarios are equally likely at the moment.

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 weekly review, and for long-term outlooks see the latest big picture update.

Technical Analysis

Gold closed slightly lower today, holding above support at the lower boundary of the power uptrend from early July. Technical indicators remain slightly bullish overall, tentatively favoring a return to recent all-time highs.

Cycle Analysis

We are 5 trading days into the cycle following the short-term cycle low (STCL) on August 25. The alpha high (AH) will likely form sometime during the next 2 sessions, if it has not already occurred yesterday. A quick move below the latest STCL during the alpha phase decline would favor a transition to left translation and forecast additional short-term losses. Alternatively, a brief alpha phase decline followed by a strong move above the last beta high (BH) would reconfirm right translation and predict additional gains. The window during which the next STCL is likely to occur is from September 13 to September 23, with our best estimate being in the September 14 to September 20 range.

  • Last STCL: August 25, 2011
  • Cycle Duration: 5 trading days
  • Cycle Translation: Right (bullish)
  • Next STCL Window: September 13 to September 23; best estimate in the September 14 to September 20 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 the recent high near $1,900 would reconfirm the long-term uptrend and forecast additional gains.
  • Bearish Scenario: A close below congestion support at the $1,750 level would reconfirm the developing overbought correction from last week and predict additional losses.

Both scenarios are equally likely at the moment.

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 slightly lower today, holding above support at the lower boundary of the power uptrend from early July. Technical indicators are neutral to slightly bullish overall, suggesting that direction is in question with a slight upside bias.

Short-term Outlook

  • Bullish Scenario: A rebound and close well above the recent high near 45 would reconfirm the long-term uptrend and forecast additional gains.
  • Bearish Scenario: A close below power uptrend support near 42.60 would reconfirm the overbought correction from last week and predict additional losses.

Both scenarios are equally likely at the moment.

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 weekly review, and for long-term outlooks see the latest big picture update.

Technical Analysis

Oil closed near unchanged today, holding at recent highs of the oversold reaction from early August. Technical indicators are slightly bullish overall, tentatively favoring a continuation of the reaction.

Cycle Analysis

We are 4 trading days into the cycle following the short-term cycle low (STCL) on August 26. A close well above current levels would reconfirm right translation and forecast additional short-term gains. The window during which the next STCL is likely to occur is from September 15 to September 29, with our best estimate being in the September 20 to September 26 range.

  • Last STCL: August 26, 2011
  • Cycle Duration: 4 trading days
  • Cycle Translation: Right (bullish)
  • Next STCL Window: September 15 to September 29; best estimate in the September 20 to September 26 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 current levels would reconfirm the oversold reaction from early August and predict a move up to congestion resistance in the $92.50 area.
  • Bearish Scenario: A reversal and close below congestion support near $85 would predict a return to the previous low of the downtrend from May in the $81 area.

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

Category: Forecasts, Short-term Forecasts


Comments are closed.