Intermediate-term Forecast for April 13, 2013

| April 13, 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 sharply higher this week, moving up to a new high for 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 1,457 would favor a return to cyclical bull market support currently near 1,279. Technical indicators are bullish overall, strongly favoring a continuation of the advance.

Cycle Analysis

We are 21 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending November 16. The strong advance this week eliminated the cycle high setup that occurred last week. The latest intermediate-term cycle high (ITCH) is long overdue 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 from April 19 to May 17.

  • Last ITCL: November 16, 2012
  • Cycle Duration: 21 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: April 19 to May 17.
  • 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 below power uptrend support near 1,551 would predict a relatively quick return to power uptrend support near 1,457.

The bullish 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 slightly higher this week, holding below support at the lower boundary of the uptrend from July. Technical indicators are neutral to slightly bearish overall, suggesting that direction is in question with a slight downward bias.

Cycle Analysis

We are 8 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: 8 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 the recent short-term low near 1.69% 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 again this week, retreating further from previous highs of the uptrend from 2011. Technical indicators remain moderately bullish overall, favoring a continuation of the advance.

Cycle Analysis

We are 10 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending February 1. The decline during the last 2 weeks has caused a slight change to our preferred scenario and it is now likely that the last half cycle high (HCH) formed in late March. The magnitude and duration of 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: 10 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 closed sharply lower this week, breaking well below congestion support in the 1,550 area. Price behavior had been confined to a trading range between 1,550 and 1,795 since late 2011 and the weekly close well below the lower boundary of the formation reconfirms the long-term correction from September 2011 and favors additional intermediate-term weakness. Technical indicators are extremely bearish overall, strongly favoring a continuation of the decline.

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 weekly close well below the last ITCL reconfirms the current bearish translation and favors additional intermediate-term weakness. 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: 5 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 quick rebound and weekly close above downtrend resistance near 1,615 would predict a move up to congestion resistance at the 1,660 level.
  • Bearish Scenario: A close below current levels would reconfirm the long-term correction from 2011 and forecast additional losses.

The bearish scenario is highly likely (>80% 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 sharply lower this week, moving down to a new low for the long-term correction from September 2011 below congestion support in the 40 area. The close well below congestion support near 40 reconfirms the long-term correction and favors additional intermediate-term weakness. Technical indicators are extremely bearish overall, strongly favoring a continuation of the decline.

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close well above the 60-week moving average at 41.75 would predict a move up toward the all-time high near 45.15.
  • Bearish Scenario: A close below current levels would reconfirm the long-term correction from 2011 and forecast additional losses.

The bearish scenario is highly likely (>80% 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 lower this week, retreating further from recent short-term highs and beginning another test of congestion support in the 90 area. Technical indicators are effectively neutral overall, suggesting that direction is in question.

Cycle Analysis

We are 6 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending March 8. Cycle translation remains in question. A quick rebound followed by 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, an extended decline that moves 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: 6 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: June 21 to November 8; best estimate in the August 16 to September 13 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 82.60.

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

Category: Forecasts, Intermediate-term Forecasts


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