Intermediate-term Forecast for March 16, 2013

| March 16, 2013

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 slightly higher this week, moving up to a new high for cyclical bull market from 2009. The advance from 2011 is moving higher at an unsustainable rate and it will likely be followed by a potentially violent overbought correction. A weekly close well below support at the lower boundary of the power uptrend from October 2011 would favor a return to cyclical bull market support currently near 1,272. Technical indicators remain bullish overall, strongly favoring a continuation of the advance.

Cycle Analysis

We are 17 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending November 16. The latest intermediate-term cycle high (ITCH) is imminent and it could form at any time. The magnitude and duration of the rally phase of the current cycle reconfirms the current bullish translation and favors additional intermediate-term strength. The window during which the next ITCL is likely to occur is now through May 10, with our best estimate being in the April 5 to May 3 range.

  • Last ITCL: November 16, 2012
  • Cycle Duration: 17 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: Now through May 10; best estimate in the April 5 to May 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 current levels would reconfirm the cyclical bull market from 2009 and forecast additional gains.
  • Bearish Scenario: A reversal and close well below power uptrend support near 1,431 would predict a move down toward cyclical bull market support near 1,272.

The bullish scenario is more likely (~70% 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 slightly lower this week, retreating from recent highs of the uptrend from July and continuing a test of congestion resistance in the 2.03% area. Technical indicators remain moderately bullish overall, favoring a continuation of the advance.

Cycle Analysis

We are 4 weeks into the cycle following the intermediate-term cycle high (ITCH) that occurred during the week ending February 15. It remains possible that the latest intermediate-term cycle low (ITCL) formed during the week ending March 8, although we would need to see a strong move up to new short-term highs to confirm that development. Renewed strength next week would indicate that the ITCL is likely in place and reconfirm the current bullish translation. Alternatively, a quick reversal followed by a return to the ITCL in November would suggest that cycle translation is in question. The window during which the next ITCH is likely to occur is from May 10 to June 7.

  • Last ITCH: February 15, 2013
  • Cycle Duration: 4 weeks
  • Cycle Translation: Bullish
  • Next ITCH Window: May 10 to June 7.
  • 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 well above congestion resistance in the 2.03% area would reconfirm the uptrend from July and predict a move up to congestion resistance at the 2.30% level.
  • Bearish Scenario: A reversal and close below uptrend support near 1.75% would forecast a return to the previous long-term low of the secular bear market near 1.40%.

The bullish 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 moderately lower this week, retreating from previous highs of the uptrend from 2011. Technical indicators are moderately bullish overall, favoring a continuation of the advance from February.

Cycle Analysis

We are 6 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending February 1. A cycle high signal was nearly generated this week, indicating that a half cycle high (HCH) may have formed last week. Additional weakness next week would generate a cycle high signal and confirm that the HCH is in place. The move well above the HCH in November during the initial rally phase of the current cycle reconfirms the current bullish translation and favors additional intermediate-term strength. The window during which the next ITCL is likely to occur is from June 7 to July 26, with our best estimate being in the June 14 to July 12 range.

  • Last ITCL: February 1, 2013
  • Cycle Duration: 6 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: June 7 to July 26; best estimate in the June 14 to July 12 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 the recent short-term high at 82.77 would predict a move up to the previous high of the uptrend from 2011 near 83.50.
  • Bearish Scenario: A reversal and close below congestion support in the 80 area would forecast a move down to congestion support at the 78.50 level.

The bullish scenario is more likely (~70% 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 slightly higher this week, holding above congestion support in the 1,550 area. The long-term correction from September 2011 has taken the form of a sideways consolidation pattern that favors an eventual resumption of the secular bull market from 2001. Price behavior has been confined to a trading range between 1,550 and 1,795 since late 2011 and a weekly close well outside of this area will signal the direction of the next meaningful move with a high degree of statistical confidence. Technical indicators are moderately bearish overall, favoring a continuation of the decline from October.

Cycle Analysis

We are 19 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending November 2. A cycle low signal was generated this week, indicating that the latest ITCL likely formed last week. Only a quick move below the stop level at 1,576 next week would invalidate the signal and suggest that the cycle from November is still in progress. The move well below the last half cycle low (HCL) reconfirms the current bearish translation and favors additional intermediate-term weakness. The window during which the next ITCL is likely to occur is now through April 12, with our best estimate being now through March 22.

  • Last ITCL: November 2, 2012
  • Cycle Duration: 19 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: Now through April 12; best estimate now through March 22.
  • Setup Status: Cycle low setup occurred this week.
  • Trigger Status: Cycle low trigger occurred this week.
  • Signal Status: Cycle low signal was generated this week.
  • Stop Level: 1,576

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close above the middle of the Bollinger bands near 1,662 would predict a move up toward congestion resistance in the 1,795 area.
  • Bearish Scenario: A close well below congestion support in the 1,550 area would reconfirm the long-term correction from 2011 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 slightly higher this week, holding above previous lows of the long-term correction from September 2011 and continuing a test of congestion support in the 40 area. The correction has taken the form of a sideways consolidation pattern that favors an eventual resumption of the secular bull market. However, a weekly close well below congestion support in the 40 area would forecast additional intermediate-term weakness. Technical indicators remain moderately bearish overall, favoring a continuation of the decline from October.

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close above the middle of the Bollinger bands at 41.91 would predict a move up toward the all-time high near 45.15.
  • Bearish Scenario: A close well below congestion support in the 40 area would reconfirm the long-term correction from 2011 and forecast additional losses.

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 moderately higher this week, reacting further off of congestion support in the 90 area. Technical indicators are slightly bullish overall, tentatively favoring a move up toward recent highs.

Cycle Analysis

We are 19 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending November 2. The magnitude and duration of the rebound off of the last ITCL suggests that cycle translation is in question. A move below the last ITCL during the decline from the last intermediate-term cycle high (ITCH) would reconfirm the current bearish translation and favor additional intermediate-term weakness. Alternatively, a brief, shallow decline followed by an extended advance that moves well above the ITCH in September would signal the likely transition to a bullish translation. The window during which the next ITCL is likely to occur is now through July 5, with our best estimate being in the April 12 to May 10 range.

  • Last ITCL: November 2, 2012
  • Cycle Duration: 19 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: Now through July 5; best estimate in the April 12 to May 10 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 short-term high at 97.72 would reconfirm the reaction from November and predict a move up to congestion resistance at the 100 level.
  • Bearish Scenario: A close below congestion support in the 90 area would forecast a move down toward cyclical bull market support near 82.40.

Both scenarios are equally likely.

Category: Forecasts, Intermediate-term Forecasts


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