Stock Market Confirms Formation of Short-term Cycle Low

| October 6, 2011

The S&P 500 index closed sharply higher for a third straight session, moving toward the middle of the trading range between 1,120 and 1,220 and approaching resistance at the upper boundary of the power downtrend from late July.

The strong move higher today confirms that the latest short-term cycle low (STCL) occurred on October 4 as indicated by the cycle low signal that was generated yesterday.

The extreme volatility following the long-term breakdown in July continues to drive violent swings higher and lower. Near-term direction is in question, but market behavior during the next few weeks will likely provide a definitive signal with respect to long-term direction, so it will be important to monitor stocks closely. We will identify the key developments as they occur in our market forecasts and signal notifications available to subscribers.

Category: Commentary, Market Update

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