Intermediate-term Forecast for April 14, 2012

| April 14, 2012

S&P 500 Index Weekly Chart Analyses

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

Technical Analysis

The index closed sharply lower this week, retreating further from recent highs of the cyclical bull market from March 2009. Technical indicators are effectively neutral overall, suggesting that direction is in question. The rally from October 2011 had been rising at an unsustainable rate and the decline from last week signals the likely start of a potentially violent overbought correction.

Cycle Analysis

We are 20 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending November 25. A cycle high signal was generated this week, confirming that the intermediate-term cycle high (ITCH) formed during the week ending March 30. A shallow decline into the forthcoming ITCL would reconfirm right translation and favor additional intermediate-term strength. Alternatively, an extended decline that approaches the last half cycle high (HCH) near 1,285 would suggest that cycle translation is in question. The window during which the next ITCL is likely to occur is now through May 18, with our best estimate being now through May 11.

  • Last ITCL: November 25, 2011
  • Cycle Duration: 20 weeks
  • Cycle Translation: Right (bullish)
  • Next ITCL Window: Now through May 18; best estimate now through May 11.
  • Setup Status: Cycle high setup occurred during the week ending March 23.
  • Trigger Status: Cycle high trigger occurred this week.
  • Signal Status: Cycle high signal was generated this week.
  • Stop Level: None active.

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close above the recent high near 1,408 would reconfirm the cyclical uptrend from March 2009 and forecast additional gains.
  • Bearish Scenario: A close below congestion support at the 1,340 level would predict a move down toward congestion support in the 1,275 area.

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

US 10-year Treasury Note Yield Weekly Chart Analyses

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

Technical Analysis

Yields closed sharply lower this week, moving down toward previous long-term lows of the secular bear market. Technical indicators are slightly bearish overall, tentatively favoring a return to recent lows.

Cycle Analysis

We are 4 weeks into the cycle following the intermediate-term cycle high (ITCH) that occurred during the week ending March 16. An extended decline that moves below the last intermediate-term cycle low (ITCL) near 1.80% would reconfirm left translation and favor additional intermediate-term weakness. Alternatively, a shallow decline followed by a move well above the last ITCH would confirm a transition to right translation. The window during which the next ITCH is likely to occur is from June 8 to July 6.

  • Last ITCH: March 16, 2012
  • Cycle Duration: 4 weeks
  • Cycle Translation: Left (bearish)
  • Next ITCH Window: June 8 to July 6.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close well above congestion resistance in the 2.30% area would reconfirm the oversold reaction from January and forecast additional gains.
  • Bearish Scenario: A close below current levels would predict a return to the recent secular bear market low near 1.80%.

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

US Dollar Index Weekly Chart Analyses

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

Technical Analysis

The index closed slightly lower this week, holding below previous highs of the uptrend from August 2011. Technical indicators remain slightly bullish overall, tentatively favoring a return to recent highs.

Cycle Analysis

We are 7 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending February 24. It remains possible that the initial rally phase of the current cycle is still in progress. A move above the second half cycle high (HCH) of the previous cycle would reconfirm right translation and favor additional intermediate-term strength. Alternatively, a quick reversal and move below the last ITCL would signal a transition to left translation. The window during which the next ITCL is likely to occur is from June 29 to August 17, with our best estimate being in the July 6 to August 3 range.

  • Last ITCL: February 24, 2012
  • Cycle Duration: 7 weeks
  • Cycle Translation: Right (bullish)
  • Next ITCL Window: June 29 to August 17; best estimate in the July 6 to August 3 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Intermediate-term Outlook

  • Bullish Scenario: A weekly close above congestion resistance in the 80.50 area would predict a return to the previous high of the uptrend from August 2011 near 81.50.
  • Bearish Scenario: A reversal and close below uptrend support near 78.50 would predict a move down toward congestion support in the 76 area.

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

Gold Weekly Chart Analyses

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

Technical Analysis

Gold closed moderately higher this week, holding above support at the lower boundary of the cyclical bull market from 2008. Technical indicators are slightly bearish overall, tentatively favoring a move below uptrend support.

Cycle Analysis

We are 15 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending December 30. An extended corrective phase that moves below the last ITCL would reconfirm the bearish translation from September 2011 and favor additional weakness. Alternatively, a shallow corrective phase that holds well above the last ITCL would favor a transition to right translation during the next cycle. The window during which the next ITCL is likely to occur is from April 20 to June 8, with our best estimate being in the April 27 to May 25 range.

  • Last ITCL: December 30, 2011
  • Cycle Duration: 15 weeks
  • Cycle Translation: Left (bearish)
  • Next ITCL Window: April 20 to June 8; best estimate in the April 27 to May 25 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close above the previous short-term high at $1,790 would reconfirm the reaction from December 2011 and predict a move up to all-time highs near $1,886.
  • Bearish Scenario: A close well below cyclical uptrend support near $1,620 would signal the likely development of an extended correction or consolidation formation and forecast additional losses.

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

Gold Currency Index Weekly 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 this week, reacting off of recent short-term lows below support at the lower boundary of the cyclical uptrend from 2008. The recent breakdown constitutes a negative divergence with gold in US dollar terms and favors the development of an extended correction or period of consolidation. Technical indicators are neutral to slightly bearish overall, suggesting that direction is in question with a slight downward bias.

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close above the recent short-term high near 43.60 would predict a return to all-time highs near 45.15.
  • Bearish Scenario: A close below the recent short-term low near 40.75 would confirm the break below cyclical uptrend support and signal the likely development of an extended correction or consolidation formation.

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

Oil Weekly Chart Analyses

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

Technical Analysis

Oil closed slightly lower this week, holding below recent highs of the uptrend from October 2011. Technical indicators are effectively neutral overall, suggesting that direction is in question.

Cycle Analysis

We are 10 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending February 3. A shallow decline into the forthcoming half cycle low (HCL) followed by a move above the last half cycle high (HCH) would reconfirm right translation and favor additional intermediate-term strength. Alternatively, an extended decline that returns to the last ITCL would suggest that cycle translation is in question. The window during which the next ITCL is likely to occur is from May 25 to October 19, with our best estimate being in the July 20 to August 17 range.

  • Last ITCL: February 3, 2012
  • Cycle Duration: 10 weeks
  • Cycle Translation: Right (bullish)
  • Next ITCL Window: May 25 to October 19; best estimate in the July 20 to August 17 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close above the recent high near $109.70 would reconfirm the uptrend from October 2011 and forecast a return to the previous cyclical bull market high near $114.
  • Bearish Scenario: A close below current levels would predict a return to congestion support in the $100 area.

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

Category: Forecasts, Intermediate-term Forecasts


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