Short-term Forecast for January 29, 2013

| January 29, 2013

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 moderately higher today, moving up to a new high for the cyclical bull market from 2009. Technical indicators are bullish overall, strongly favoring a continuation of the advance. However, the short-term uptrend from November is moving higher at an unsustainable rate and it will likely be followed by a potentially violent overbought correction.

Cycle Analysis

The strong advance today has eliminated the cycle high setup that occurred during the previous session. Additionally, the magnitude and duration of the advance from mid-January has caused a change to our preferred scenario and it is now likely that the beta phase rally is in progress. We are 8 sessions into the beta phase rally of the cycle following the short-term cycle low (STCL) on December 28. The magnitude and duration of the rebound off of the last STCL reconfirms the current bullish translation and favors additional short-term strength. The window during which the next STCL is likely to occur is from February 11 to March 4, with our best estimate being in the February 11 to February 15 range.

  • Last STCL: December 28, 2012
  • Cycle Duration: 20 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: February 11 to March 4; best estimate in the¬†February 11 to February 15 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 long-term uptrend and forecast additional gains.
  • Bearish Scenario: A reversal and close below congestion support in the 1,460 area would predict a return to short-term uptrend support near 1,437.

The bullish scenario is highly likely (>80% 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 moderately higher again today, moving up to a new high for the uptrend from early December. Technical indicators remain bullish overall, strongly favoring a continuation of the advance.

Cycle Analysis

We are 4 sessions into the rally phase of the cycle following the short-term cycle high (STCH) on January 4. An extended rally phase that moves well above the last STCH would reconfirm the current bullish translation and favor additional short-term strength. Alternatively, a quick reversal followed by an extended decline phase of more than 11 sessions in duration that moves below the last alpha low (AL) would signal the likely transition to a bearish translation. The window during which the next STCH is likely to occur is now through February 16, with our best estimate being in the February 5 to February 11 range.

  • Last STCH: January 4, 2013
  • Cycle Duration: 16 sessions
  • Cycle Translation: Bullish
  • Next STCH Window: Now through February 16; best estimate in the February 5 to February 11 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 uptrend from early December and forecast additional gains.
  • Bearish Scenario: A reversal and close below congestion support in the 1.84% area would predict a move down toward congestion support at the 1.70% level.

The bullish scenario is highly likely (>80% 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, moving down toward previous lows of the downtrend from July below congestion resistance in the 80 area. Technical indicators are slightly bearish overall, tentatively favoring a return to previous lows of the decline.

Cycle Analysis

We are 6 sessions into the alpha phase decline of the cycle following the short-term cycle low (STCL) on January 14. The beta low (BL) will likely form sometime during the next 3 sessions. Cycle translation remains in question. A quick rebound followed by a move well above the last alpha high (AH) during the beta phase rally would signal the likely transition to a bullish translation. Alternatively, an extended alpha phase decline of more than 6 sessions in duration that moves well below the last STCL would reconfirm the current bearish translation and favor additional short-term weakness. The window during which the next STCL is likely to occur is from February 8 to February 25, with our best estimate being in the February 13 to February 20 range.

  • Last STCL: January 14, 2013
  • Cycle Duration: 10 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: February 8 to February 25; best estimate in the February 13 to February 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 rebound and close above the recent short-term high at 80.56 would predict a move up to congestion resistance at the 81.50 level.
  • Bearish Scenario: A close below the previous low of the decline from July near 78.90 would reconfirm the downtrend and forecast additional losses.

The bearish 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 today, reacting off of recent lows of the downtrend from October below the congestion zone in the 1,680 area. Technical indicators are neutral to slightly bearish overall, suggesting that direction is in question with a slight downward bias.

Cycle Analysis

We are 5 sessions into the beta phase decline of the cycle following the short-term cycle low (STCL) on January 7. Cycle translation remains in question. A quick rebound followed by an extended alpha phase rally of more than 5 sessions in duration that moves above the last beta high (BH) would signal the likely transition to a bullish translation. Alternatively, an extended beta phase decline of more than 4 sessions in duration that moves below the last STCL would reconfirm the current bearish translation and favor additional short-term weakness. The window during which the next STCL is likely to occur is now through February 5, with our best estimate being now through January 30. The STCL may have formed during the previous session, although we would need to see additional strength to confirm that development.

  • Last STCL: January 7, 2013
  • Cycle Duration: 15 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: Now through February 5; best estimate now through January 30.
  • 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 1,698 would reconfirm the reaction from early January and predict a move up toward congestion resistance in the 1,740 area.
  • Bearish Scenario: A close below the recent short-term low near 1,648 would reconfirm the downtrend from October and forecast a move down to congestion support in the 1,630 area.

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 slightly higher today, holding near previous lows of the downtrend from October and continuing a test of congestion support in the 41.60 area. Technical indicators remain slightly bearish overall, tentatively favoring a continuation of the decline.

Short-term Outlook

  • Bullish Scenario: A rebound and close well above congestion resistance in the 42.40 area would predict a move up to downtrend resistance near 43.35.
  • Bearish Scenario: A close below the previous short-term low at 41.34 would reconfirm the downtrend from October and forecast additional losses.

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 sharply higher today, moving up to a new high for the uptrend from November above congestion resistance in the 97 area. Technical indicators are bullish overall, strongly favoring a continuation of the advance.

Cycle Analysis

We are 4 sessions into the beta phase rally of the cycle following the short-term cycle low (STCL) on January 15. An extended beta phase rally of more than 4 sessions in duration that moves well above the last alpha high (AH) would reconfirm the current bullish translation and favor additional short-term strength. Alternatively, a quick reversal followed by an extended beta phase decline of more than 4 sessions in duration that returns to the last STCL would suggest that cycle translation is in question. The window during which the next STCL is likely to occur is from February 4 to February 19, with our best estimate being in the February 4 to February 8 range.

  • Last STCL: January 15, 2013
  • Cycle Duration: 9 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: February 4 to February 19; best estimate in the February 4 to February 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 current levels would confirm the break above congestion resistance in the 97 area and forecast additional gains.
  • Bearish Scenario: A reversal and close below the middle of the Bollinger bands at 94.65 would predict a move down to congestion support in the 92.50 area.

The bullish scenario is highly likely (>80% probable).

Category: Forecasts, Short-term Forecasts


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