Intermediate-term Forecast for April 6, 2013

| April 6, 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 moderately lower this week, retreating from recent highs of the cyclical bull market from 2009. The advance from 2011 has been 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 currently near 1,449 would favor a return to cyclical bull market support currently near 1,277. Technical indicators remain moderately bullish overall, favoring a continuation of the advance.

Cycle Analysis

We are 20 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending November 16. A cycle high setup occurred this week, indicating that the overdue intermediate-term cycle high (ITCH) may have formed during the previous week. A close below current levels next week would generate a cycle high signal and confirm that the decline phase of the current cycle is in progress. 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.

  • Last ITCL: November 16, 2012
  • Cycle Duration: 20 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: Now through May 10.
  • Setup Status: Cycle high setup occurred this week.
  • Trigger Status: Cycle high trigger is pending from this week, requiring a close below current levels next week to generate a cycle high signal.
  • Signal Status: No active signals.
  • Stop Level: None active.

Intermediate-term Outlook

  • Bullish Scenario: A weekly close well above the recent high near 1,569 would reconfirm the cyclical bull market from 2009 and forecast additional gains.
  • Bearish Scenario: A close below power uptrend support near 1,541 would predict a relatively quick return to power uptrend support near 1,449.

Both scenarios are equally likely.

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, breaking below support at the lower boundary of the uptrend from July. Technical indicators are slightly bearish overall, tentatively favoring a move down toward previous lows of the long-term downtrend.

Cycle Analysis

We are 7 weeks into the cycle following the intermediate-term cycle high (ITCH) that occurred during the week ending February 15. A quick rebound followed by a move up to new short-term highs would reconfirm the current bullish translation and favor additional intermediate-term strength. Alternatively, a return to the intermediate-term cycle low (ITCL) in November near 1.57% 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: 7 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 rebound and 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 close below current levels would forecast a return to the previous long-term low of the secular bear market near 1.40%.

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 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.

Cycle Analysis

We are 9 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending February 1. The move well above the half cycle high (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 7 to July 5 range.

  • Last ITCL: February 1, 2013
  • Cycle Duration: 9 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: June 7 to July 26; best estimate in the June 7 to July 5 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 well above the previous high of the uptrend from 2011 near 83.50 would reconfirm the advance and forecast additional gains.
  • 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 rebounded from large early losses to close moderately lower this week, beginning another test of 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. However, a weekly close well below congestion support at the 1,550 level would forecast additional intermediate-term weakness. 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 4 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending March 8. The decline during the last 2 weeks suggests that a half cycle high (HCH) may have formed during the week ending March 22, although we would need to see a close below the last ITCL near 1,576 to confirm that development. A brief, weak rebound off of the last ITCL followed by a move down to new short-term lows would reconfirm the current bearish translation and favor additional intermediate-term weakness. Alternatively, an extended rebound that returns to the HCH in January near 1,700 would suggest that cycle translation is in question. The window during which the next ITCL is likely to occur is from June 28 to August 16, with our best estimate being in the June 28 to July 26 range.

  • Last ITCL: March 8, 2013
  • Cycle Duration: 4 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: June 28 to August 16; best estimate in the June 28 to July 26 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 congestion resistance at the 1,660 level would predict a move up toward the upper boundary of the trading range near 1,795.
  • 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 moderately lower this week, approaching previous lows of the long-term correction from September 2011 near 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 at the 40 level would forecast additional intermediate-term weakness. Technical indicators are moderately bearish overall, favoring a continuation of the decline from October.

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close well above the 60-week moving average at 41.82 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 sharply lower this week, retreating from recent short-term highs below congestion resistance in the 100 area. Technical indicators are neutral to slightly bullish overall, suggesting that direction is in question with a slight upward bias.

Cycle Analysis

We are 5 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending March 8. The sharp decline this week generated a cycle high signal, indicating that an intermediate-term cycle high (ITCH) may have formed during the previous week. Only a quick move above the stop level at 97.36 would invalidate the signal and suggest that the rally phase of the current cycle is still in progress. Cycle translation remains in question. An extended advance that moves well above the high in September at 99.15 would signal the transition to a bullish translation and favor additional intermediate-term strength. Alternatively, a move below the ITCL in November near 84.65 would favor a continuation of the current bearish translation. The window during which the next ITCL is likely to occur is from June 21 to November 8, with our best estimate being in the August 16 to September 13 range.

  • Last ITCL: March 8, 2013
  • Cycle Duration: 5 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: June 21 to November 8; best estimate in the August 16 to September 13 range.
  • Setup Status: Cycle high setup occurred this week.
  • Trigger Status: Cycle high trigger occurred this week.
  • Signal Status: Cycle high signal was generated this week.
  • Stop Level: 97.36

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 82.50.

Both scenarios are equally likely.

Category: Forecasts, Intermediate-term Forecasts


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