Short-term Forecast for October 7, 2013

| October 7, 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, moving slightly below support at the 50-day moving average and approaching support at the lower boundary of the uptrend from 2012. Technical indicators are neutral to slightly bearish overall, suggesting that direction is in question with a slight downward bias.

Cycle Analysis

We are 13 sessions into the alpha phase decline of the cycle following the short-term cycle low (STCL) on August 27. The beta low (BL) will likely form sometime during the next 2 sessions. 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 1,730 would reconfirm the current bullish translation and favor additional short-term strength. Alternatively, an extended alpha phase decline that approaches the last STCL near 1,630 would suggest that cycle translation is in question. The window during which the next STCL is likely to occur is from October 8 to October 29, with our best estimate being in the October 23 to October 29 range.

  • Last STCL: August 27, 2013
  • Cycle Duration: 28 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: October 8 to October 29; best estimate in the October 23 to October 29 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 high near 1,727 would reconfirm the cyclical bull market from 2009 and forecast additional gains.
  • Bearish Scenario: A close well below uptrend support near 1,666 would reconfirm the downtrend from September and predict a move down toward congestion support in the 1,600 area.

Both scenarios are equally likely.

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 slightly lower today, holding above recent short-term lows below the congestion zone in the 2.71% area. Technical indicators are moderately bearish overall, favoring a continuation of the decline from early September.

Cycle Analysis

We are 5 sessions into the rally phase of the cycle following the short-term cycle high (STCH) on September 10. A brief, weak rally phase of less than 8 sessions in duration followed by an extended decline phase that moves well below the last alpha low (AL) near 2.61% would reconfirm the current bearish translation and favor additional short-term weakness. Alternatively, an extended rally phase of more than 9 sessions in duration that returns to the last STCH near 2.96% would suggest that cycle translation is in question. The window during which the next STCH is likely to occur is now through October 22, with our best estimate being in the October 8 to October 14 range.

  • Last STCH: September 10, 2013
  • Cycle Duration: 19 sessions
  • Cycle Translation: Bearish
  • Next STCH Window: Now through October 22; best estimate in the October 8 to October 14 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 middle of the Bollinger bands near 2.73% would predict a move up toward the previous high of the uptrend from May near 2.98%.
  • Bearish Scenario: A close well below the recent low near 2.61% would reconfirm the downtrend from early September and predict a return to congestion support at the 2.48% level.

The bearish scenario is more likely (~70% 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 lower today, moving down toward recent lows of the downtrend from July. Technical indicators are moderately bearish overall, favoring a continuation of the decline.

Cycle Analysis

We are 2 sessions into the beta phase rally of the cycle following the short-term cycle low (STCL) on September 18. A brief, weak beta phase rally of less than 6 sessions in duration followed by an extended beta phase decline that moves below the last beta low (BL) at 79.72 would reconfirm the current bearish translation and favor additional short-term weakness. Alternatively, an extended beta phase rally of more than 7 sessions in duration that returns to the last alpha high (AH) near 80.75 would suggest that cycle translation is in question. The window during which the next STCL is likely to occur is from October 14 to October 28, with our best estimate being in the October 17 to October 23 range.

  • Last STCL: September 18, 2013
  • Cycle Duration: 13 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: October 14 to October 28; best estimate in the October 17 to October 23 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 close well above the middle of the Bollinger bands at 80.67 would predict a move up toward the previous short-term high at 82.67.
  • Bearish Scenario: A close below the recent low at 79.85 would reconfirm the downtrend from July and forecast additional losses.

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

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 moderately higher today, reacting further off of recent short-term lows near congestion support at the 1,275 level. Technical indicators are slightly bearish overall, tentatively favoring a continuation of the decline from August.

Cycle Analysis

We are 4 sessions into the alpha phase rally of the cycle following the short-term cycle low (STCL) on October 2. The alpha high (AH) will likely form sometime during the next 3 sessions. A quick reversal followed by a move below the last STCL near 1,277 during the alpha phase decline would reconfirm the current bearish translation and favor additional short-term weakness. Alternatively, an extended alpha phase rally of more than 5 sessions in duration that returns to the last beta high (BH) near 1,354 would suggest that cycle translation is in question. The window during which the next STCL is likely to occur is from October 17 to October 29, with our best estimate being in the October 18 to October 24 range.

  • Last STCL: October 2, 2013
  • Cycle Duration: 4 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: October 17 to October 29; best estimate in the October 18 to October 24 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 close well above congestion resistance at the 1,350 level would predict a return to the short-term high in August near 1,418.
  • Bearish Scenario: A reversal and close below congestion support in the 1,275 area would predict a move down toward the previous low of the cyclical downtrend from 2011 near 1,200.

Both scenarios are equally likely.

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 slightly higher today, holding near recent short-term lows above previous lows of the long-term downtrend. Technical indicators are slightly bearish overall, tentatively favoring a continuation of the decline from August.

Short-term Outlook

  • Bullish Scenario: A close well above the middle of the Bollinger bands at 34.12 would predict a move up toward congestion resistance in the 37.50 area.
  • Bearish Scenario: A close below the recent short-term low at 32.95 would forecast a move down to the previous low of the downtrend from October at 31.15.

Both scenarios are equally likely.

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 slightly lower today, holding above recent short-term lows below support at the lower boundary of the uptrend from April. Technical indicators are slightly bearish overall, tentatively favoring a continuation of the decline from early September.

Cycle Analysis

The lack of upward progress during the last 3 sessions indicates that the alpha high (AH) likely formed on October 3. We are 3 sessions into the alpha phase decline of the cycle following the short-term cycle low (STCL) on October 1. An extended alpha phase decline that moves below the last STCL at 101.06 would reconfirm the current bearish translation and favor additional short-term weakness. Alternatively, a quick rebound followed by an extended beta phase rally of more than 4 sessions in duration that returns to the AH in September near 109 would suggest that cycle translation is in question. The window during which the next STCL is likely to occur is from October 18 to November 1, with our best estimate being in the October 23 to October 29 range.

  • Last STCL: October 1, 2013
  • Cycle Duration: 4 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: October 18 to November 1; best estimate in the October 23 to October 29 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 close well above the middle of the Bollinger bands at 104.77 would predict a move up toward the previous high of the uptrend from April at 110.31.
  • Bearish Scenario: A close below the recent short-term low at 101.62 would reconfirm the downtrend from early September and predict a move down to congestion support in the 98 area.

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

Category: Forecasts, Short-term Forecasts


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