Intermediate-term Forecast for July 27, 2013

| July 27, 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 near unchanged this week, holding at recent highs of the cyclical bull market from 2009. The uptrend from 2011 has moved higher at an unsustainable rate and it will likely be followed by a violent overbought correction. Technical indicators are moderately bullish overall, favoring a continuation of the advance.

Cycle Analysis

We are 14 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending April 19. A move well above the half cycle high (HCH) in May near 1,687 during the second rally phase of the current cycle would reconfirm the current bullish translation and favor additional intermediate-term strength. Alternatively, a quick reversal followed by a return to the last ITCL near 1,536 would suggest that cycle translation is in question. The window during which the next ITCL is likely to occur is from August 9 to October 11, with our best estimate being in the August 16 to September 13 range.

  • Last ITCL: April 19, 2013
  • Cycle Duration: 14 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: August 9 to October 11; 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 weekly close well above current levels would reconfirm the cyclical bull market from 2009 and forecast additional gains.
  • Bearish Scenario: A reversal and close well below the middle of the Bollinger bands near 1,616 would confirm a break below nearby power uptrend support and predict a return to power uptrend support near 1,541.

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 moderately higher this week, moving up toward recent highs of the uptrend from 2012. Technical indicators remain moderately bullish overall, favoring a continuation of the advance. However, the uptrend has moved higher at an unsustainable rate since April and it will likely be followed by a potentially violent overbought correction.

Cycle Analysis

We are 3 weeks into the cycle following the intermediate-term cycle high (ITCH) that occurred during the week ending July 5. A brief, shallow decline from the last ITCH followed by an extended advance would reconfirm the current bullish translation and favor additional intermediate-term strength. Alternatively, an extended decline that approaches the last intermediate-term cycle low (ITCL) near 1.61% would suggest that cycle translation is in question. The window during which the next ITCH is likely to occur is from September 27 to October 25.

  • Last ITCH: July 5, 2013
  • Cycle Duration: 3 weeks
  • Cycle Translation: Bullish
  • Next ITCH Window: September 27 to October 25.
  • 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 2.80% level would reconfirm the uptrend from 2012 and forecast additional gains.
  • Bearish Scenario: A close below congestion support in the 2.30% area would predict a move down to the middle of the Bollinger bands near 2.10%.

The bullish scenario is slightly more likely (~60% 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 sharply lower this week, retreating further from recent highs of the uptrend from 2011. 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 June 14. A quick rebound followed by an extended advance that moves well above the last half cycle high (HCH) at 84.96 would reconfirm the current bullish translation and favor additional intermediate-term strength. Alternatively, an extended decline that returns to the last ITCL at 80.50 would suggest that cycle translation is in question. The window during which the next ITCL is likely to occur is from October 18 to December 6, with our best estimate being in the October 25 to November 22 range.

  • Last ITCL: June 14, 2013
  • Cycle Duration: 6 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: October 18 to December 6; best estimate in the October 25 to November 22 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 high at 84.83 would reconfirm the uptrend from 2011 and forecast additional gains.
  • Bearish Scenario: A close below short-term uptrend support near 81.05 would predict a move down to congestion support in the 80 area.

Both scenarios are equally likely.

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 moderately higher this week, reacting further off of recent lows of the cyclical downtrend from 2011 and beginning a test of congestion resistance in the 1,350 area. Technical indicators are slightly bearish overall, tentatively favoring a continuation of the decline.

Cycle Analysis

We are 3 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending July 5. A quick reversal followed by a move well below the last ITCL near 1,207 would reconfirm the current bearish translation and favor additional intermediate-term weakness. Alternatively, an extended advance that returns to the last half cycle high (HCH) near 1,394 would suggest that cycle translation is in question. The window during which the next ITCL is likely to occur is from October 25 to December 13, with our best estimate being in the October 25 to November 22 range.

  • Last ITCL: July 5, 2013
  • Cycle Duration: 3 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: October 25 to December 13; best estimate in the October 25 to November 22 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 congestion resistance in the 1,350 area would reconfirm the oversold reaction from early July and predict a return to congestion resistance at the 1,400 level.
  • Bearish Scenario: A reversal and close below the recent long-term low near 1,213 would reconfirm the cyclical downtrend from 2011 and forecast additional losses.

The bullish 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 higher this week, reacting further off of recent lows of the cyclical downtrend from 2011 and approaching congestion resistance in the 35 area. Technical indicators are slightly bearish overall, tentatively favoring a continuation of the decline.

Intermediate-term Outlook

  • Bullish Scenario: A weekly close above congestion resistance at the 35 level would reconfirm the oversold reaction from early July and predict additional gains.
  • Bearish Scenario: A reversal and close below the recent long-term low at 31.79 would reconfirm the cyclical downtrend from 2011 and forecast additional losses.

The bullish 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 previous highs of the cyclical uptrend. Technical indicators are moderately bullish overall, favoring a continuation of the rebound from April.

Cycle Analysis

We are 14 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending April 19. A cycle high setup occurred this week, suggesting that the latest intermediate-term cycle high (ITCH) may have formed during the week ending July 19. A close below current levels next week would generate a cycle high signal and indicate that the decline phase of the current cycle is likely in progress. The move well above the ITCH in September during the rally phase of the current cycle signals the likely transition to a bullish translation and favors additional intermediate-term strength. The window during which the next ITCL is likely to occur is from August 2 to December 20, with our best estimate being in the September 27 to October 25 range.

  • Last ITCL: April 19, 2013
  • Cycle Duration: 14 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: August 2 to December 20; best estimate in the September 27 to October 25 range.
  • 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 above the recent short-term high at 108.16 would reconfirm the uptrend from April and forecast a move up to congestion resistance in the 114 area.
  • Bearish Scenario: A reversal and close below congestion support in the 100 area would predict a return to congestion support at the 90 level.

The bullish scenario is more likely (~70% probable).

Category: Forecasts, Intermediate-term Forecasts


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