Intermediate-term Forecast for September 7, 2013

| September 7, 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 higher this week, reacting off of recent short-term lows below previous highs of the cyclical bull market from 2009. The weekly close below nearly power uptrend support favors a move down to support at the lower boundary of the power uptrend from 2011 near 1,574. 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 effectively neutral overall, suggesting that direction is in question.

Cycle Analysis

We are 20 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending April 19. A quick rebound followed by a move above the half cycle high (HCH) in July near 1,710 during the next rally phase would reconfirm the current bullish translation and favor additional intermediate-term strength. Alternatively, an extended decline that returns 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 now through October 11, with our best estimate being now through September 13. The latest ITCL may have already formed during the week ending August 30, although we would need to see additional strength next week to confirm that development.

  • Last ITCL: April 19, 2013
  • Cycle Duration: 20 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: Now through October 11; best estimate now through September 13.
  • 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 long-term high near 1,710 would reconfirm the cyclical bull market from 2009 and forecast additional gains.
  • Bearish Scenario: A close below the recent short-term low near 1,633 would confirm the break below nearby power uptrend support and predict a return to power uptrend support near 1,574.

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 higher this week, moving up to a new high for the uptrend from 2012 above congestion resistance in the 2.80% area. Technical indicators are bullish overall, strongly 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 9 weeks into the cycle following the intermediate-term cycle high (ITCH) that occurred during the week ending July 5. The half cycle high (HCH) is imminent and it could form at any time. The magnitude and duration of the rebound off of the last half cycle low (HCL) reconfirms the current bullish translation and favors additional intermediate-term strength. The window during which the next ITCH is likely to occur is from October 25 to January 17, with our best estimate being in the November 15 to December 13 range.

  • Last ITCH: July 5, 2013
  • Cycle Duration: 9 weeks
  • Cycle Translation: Bullish
  • Next ITCH Window: October 25 to January 17; best estimate in the November 15 to December 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 above current levels would reconfirm the uptrend from 2012 and forecast additional gains.
  • Bearish Scenario: A reversal and close well below new congestion support at the 2.80% level would confirm a break below uptrend support and predict a move down to the middle of the Bollinger bands near 2.38%.

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 slightly higher this week, holding above support at the lower boundary of the uptrend from February. Technical indicators remain effectively neutral overall, suggesting that direction is in question.

Cycle Analysis

We are 12 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending June 14. The return to the last ITCL during the decline from the last half cycle high (HCH) suggests that cycle translation is in question. An extended rebound off of the last half cycle low (HCL) that moves well above the HCH in July at 84.96 would reconfirm the current bullish translation and favor additional intermediate-term strength. Alternatively, a brief, weak advance followed by an extended decline that moves well below the last ITCL at 80.50 would signal the likely transition to a bearish translation. 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 18 to November 15 range.

  • Last ITCL: June 14, 2013
  • Cycle Duration: 12 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: October 18 to December 6; best estimate in the October 18 to November 15 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 well below uptrend support near 81.45 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 slightly lower this week, holding near recent highs of the violent oversold reaction from early July and continuing a test of congestion resistance in the 1,400 area. Technical indicators remain effectively neutral overall, suggesting that direction is in question.

Cycle Analysis

We are 9 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending July 5. The lack of upward progress during the last 2 weeks indicates that the intermediate-term cycle high (ITCH) may have formed during the week ending August 30, although we would need to see renewed weakness or additional sideways consolidation to confirm that development. The return to the half cycle high (HCH) in June suggests that cycle translation is in question. 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 moves well above the last HCH near 1,394 would signal the likely transition to a bullish translation. 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: 9 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 well above congestion resistance in the 1,400 area would reconfirm the oversold reaction from early July and forecast additional gains.
  • Bearish Scenario: A reversal and close below the recent short-term low near 1,313 would predict a return to the previous low of the cyclical downtrend from 2011 near 1,213.

Both scenarios are equally likely.

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 lower this week, retreating from recent highs of the violent oversold reaction from early July. Technical indicators remain effectively neutral overall, suggesting that direction is in question.

Intermediate-term Outlook

  • Bullish Scenario: A weekly close well above downtrend resistance near 36.80 would reconfirm the oversold reaction from early July and predict additional gains.
  • Bearish Scenario: A reversal and close below the recent short-term low at 33.81 would predict a return to the previous low of the cyclical downtrend from 2011 at 31.79.

Both scenarios are equally likely.

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 higher this week, moving up toward previous highs of the cyclical uptrend from 2009. Technical indicators are bullish overall, strongly favoring a continuation of the rebound from April.

Cycle Analysis

We are 20 weeks into the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending April 19. The move well above the previous intermediate-term cycle high (ITCH) 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 now through December 20, with our best estimate being in the October 11 to November 8 range.

  • Last ITCL: April 19, 2013
  • Cycle Duration: 20 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: Now through December 20; best estimate in the¬†October 11 to November 8 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 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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