Short-term Forecast for April 15, 2013

| April 15, 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 sharply lower today, retreating from recent highs of the cyclical bull market from 2009 and breaking below support at the lower boundary of the uptrend from November. The uptrend from November has moved higher at an unsustainable rate and the close well below uptrend support signals the likely development of a potentially violent overbought correction. Technical indicators are neutral to slightly bearish overall, suggesting that direction is in question with a slight downward bias.

Cycle Analysis

We are 2 sessions into the alpha phase decline of the cycle following the short-term cycle low (STCL) on April 5. A cycle high signal was generated today, indicating that the alpha high (AH) likely formed on April 11. Only a quick move above the stop level at 1,593 would invalidate the signal and suggest that the alpha phase rally is still in progress. The early formation of the AH after only 4 sessions suggests that cycle translation is in question and an extended alpha phase decline that moves well below the last STCL near 1,540 would signal the likely transition to a bearish translation. The window during which the next STCL is likely to occur is from May 16 to June 6, with our best estimate being in the May 29 to June 4 range.

  • Last STCL: April 5, 2013
  • Cycle Duration: 6 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: May 16 to June 6; best estimate in the May 29 to June 4 range.
  • Setup Status: Cycle high setup occurred today.
  • Trigger Status: Cycle high trigger occurred today.
  • Signal Status: Cycle high signal was generated today.
  • Stop Level: 1,593

Short-term Outlook

  • Bullish Scenario: A rebound and close well above the recent high near 1,593 would reconfirm the long-term uptrend and forecast additional gains.
  • Bearish Scenario: A close below current levels would confirm the break below short-term uptrend support and predict a move down toward congestion support in the 1,460 area.

The bearish scenario is more likely (~70% 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 lower today, approaching recent lows of the violent decline from March near congestion support in the 1.70% area. Technical indicators remain bearish overall, strongly favoring a continuation of the decline.

Cycle Analysis

The decline during the last 3 sessions indicates that the latest short-term cycle high (STCH) likely formed on April 10. We are 3 sessions into the decline phase of the cycle following the STCH on April 10. An extended decline phase of more than 11 sessions in duration that moves well below the last alpha low (AL) near 1.68% would reconfirm the current bearish translation and favor additional short-term weakness. Alternatively, a quick rebound followed by an extended rally phase that moves well above the last STCH near 1.81% would signal the likely transition to a bullish translation. The window during which the next STCH is likely to occur is from May 1 to May 22, with our best estimate being in the May 7 to May 13 range.

  • Last STCH: April 10, 2013
  • Cycle Duration: 3 sessions
  • Cycle Translation: Bearish
  • Next STCH Window: May 1 to May 22; best estimate in the May 7 to May 13 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 well above congestion resistance in the 1.84% area would predict a move up toward congestion resistance in the 2.05% area.
  • Bearish Scenario: A close below congestion support at the 1.70% level would reconfirm the downtrend from March and forecast additional losses.

The bearish 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 higher today, reacting off of recent short-term lows below previous highs of the uptrend from February. Technical indicators are effectively neutral overall, suggesting that direction is in question.

Cycle Analysis

We are 12 sessions into the alpha phase decline of the cycle following the short-term cycle low (STCL) on March 25. A cycle low signal was nearly generated today, indicating that the overdue beta low (BL) likely formed during the previous session. Additional strength or sideways consolidation during the next session would confirm that the beta phase rally is in progress. Cycle translation remains in question. A quick rebound followed by an extended beta phase rally of more than 7 sessions in duration that moves well above the last alpha high (AH) near 83.42 would reconfirm the current bullish translation and favor additional short-term strength. Alternatively, an extended alpha phase decline that returns to the last STCL near 81.83 would favor the transition to a bearish translation. The window during which the next STCL is likely to occur is from April 18 to May 2, with our best estimate being in the April 24 to April 30 range.

  • Last STCL: March 25, 2013
  • Cycle Duration: 15 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: April 18 to May 2; best estimate in the April 24 to April 30 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 well above the recent short-term high at 83.42 would reconfirm the uptrend from February and forecast additional gains.
  • Bearish Scenario: A close below the recent short-term low at 82.19 would predict a move down toward congestion support in the 81.50 area.

Both scenarios are equally likely.

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 sharply lower again today, moving down to a new low for the downtrend from October. Technical indicators remain extremely bearish overall, strongly favoring a continuation of the decline. However, the downtrend is moving lower at an unsustainable rate and it will likely be followed by a violent oversold reaction. Technical analysis produces reliable outlooks when price movements are well behaved, but abrupt crashes like the decline during the last 2 sessions severely limit the usefulness of chart analysis techniques. Therefore, short-term forecasting will be difficult while the crash is in progress and we will need to wait for renewed clarity to emerge from subsequent market behavior.

Cycle Analysis

We are 4 sessions into the beta phase decline of the cycle following the short-term cycle low (STCL) on March 26. The magnitude of the beta phase decline reconfirms the current bearish translation and favors additional short-term weakness. The window during which the next STCL is likely to occur is now through April 24, with our best estimate being now through April 17.

  • Last STCL: March 26, 2013
  • Cycle Duration: 13 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: Now through April 24; best estimate now through April 17.
  • 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 congestion resistance in the 1,550 area would predict a move up toward downtrend resistance near 1,615.
  • Bearish Scenario: A close below current levels would reconfirm the downtrend from October and forecast additional losses.

The bearish scenario is highly likely (>80% 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 sharply lower again today, moving down to a new low for the downtrend from October. Technical indicators remain extremely bearish overall, strongly favoring a continuation of the decline. However, the downtrend is moving lower at an unsustainable rate and it will likely be followed by a violent oversold reaction. Technical analysis produces reliable outlooks when price movements are well behaved, but abrupt crashes like the decline during the last 2 sessions severely limit the usefulness of chart analysis techniques. Therefore, short-term forecasting will be difficult while the crash is in progress and we will need to wait for renewed clarity to emerge from subsequent market behavior.

Short-term Outlook

  • Bullish Scenario: A rebound and close above new congestion resistance in the 40 area would predict a return to downtrend resistance near 40.75.
  • Bearish Scenario: A close below current levels would reconfirm the downtrend from October and forecast additional losses.

The bearish scenario is highly likely (>80% 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 lower again today, beginning a test of congestion support in the 88 area. Technical indicators are extremely bearish overall, strongly favoring a continuation of the decline from early April.

Cycle Analysis

We are 3 sessions into the alpha phase decline of the cycle following the short-term cycle low (STCL) on April 5. The beta low (BL) will likely form sometime during the next 2 sessions. The early formation of the alpha high (AH) followed by the move well below the last STCL during the alpha phase decline signals the likely transition to a bearish translation and favors additional short-term weakness. The window during which the next STCL is likely to occur is from April 24 to May 8, with our best estimate being in the April 29 to May 3 range.

  • Last STCL: April 5, 2013
  • Cycle Duration: 6 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: April 24 to May 8; best estimate in the April 29 to May 3 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 middle of the Bollinger bands at 94.03 would predict a move up toward the previous high of the uptrend from November near 98.
  • Bearish Scenario: A close below congestion support in the 88 area would reconfirm the downtrend from early April and forecast additional losses.

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

Category: Forecasts, Short-term Forecasts


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