Short-term Forecast for October 17, 2013

| October 17, 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 moderately higher today, moving up to a marginal new high for the cyclical bull market from 2009. Technical indicators are moderately bullish overall, favoring a continuation of the advance.

Cycle Analysis

We are 6 sessions into the beta phase rally of the cycle following the short-term cycle low (STCL) on August 27. 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, a quick reversal followed by an extended beta phase decline of more than 9 sessions in duration that returns to 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 now through October 31, with our best estimate being in the October 25 to October 31 range.

  • Last STCL: August 27, 2013
  • Cycle Duration: 36 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: Now through October 31; best estimate in the October 25 to October 31 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 current levels would reconfirm the cyclical bull market from 2009 and forecast additional gains.
  • Bearish Scenario: A reversal and close well below uptrend support near 1,662 would signal the likely start of an overbought correction and predict a move down toward congestion support in the 1,600 area.

The bullish 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 sharply lower today, moving down to a marginal new low for the downtrend from September. Technical indicators are moderately bearish overall, favoring a continuation of the decline.

Cycle Analysis

A cycle high signal was generated today, confirming that the latest short-term cycle high (STCH) formed on October 16. We are 2 sessions into the decline phase of the cycle following the STCH on October 16. 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, a brief, shallow decline phase of less than 7 sessions in duration followed by an extended rally phase that moves well above the last STCH near 2.74% would signal the likely transition to a bullish translation. The window during which the next STCH is likely to occur is from November 5 to November 26, with our best estimate being in the November 11 to November 15 range.

  • Last STCH: October 16, 2013
  • Cycle Duration: 2 sessions
  • Cycle Translation: Bearish
  • Next STCH Window: November 5 to November 26; best estimate in the November 11 to November 15 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: None active.

Short-term Outlook

  • Bullish Scenario: A rebound and close well above congestion resistance in the 2.71% area would predict a move up toward the previous high of the uptrend from May near 2.98%.
  • Bearish Scenario: A close below current levels would reconfirm the downtrend from 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 sharply lower today, moving down to a marginal new low for the downtrend from July. Technical indicators are moderately bearish overall, favoring a continuation of the decline.

Cycle Analysis

A cycle high signal was generated today, confirming that the beta high (BH) formed on October 16. We are 1 session into the beta phase decline of the cycle following the short-term cycle low (STCL) on September 18. The quick move below the last beta low (BL) during the first session 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 October 28, with our best estimate being in the October 18 to October 24 range.

  • Last STCL: September 18, 2013
  • Cycle Duration: 21 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: Now through October 28; best estimate in the October 18 to October 24 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: None active.

Short-term Outlook

  • Bullish Scenario: A rebound and close well above congestion resistance at the 81 level would predict a move up toward the previous short-term high at 82.67.
  • Bearish Scenario: A close below current levels would reconfirm the downtrend from July and forecast additional losses.

The bearish scenario is highly likely (>80% 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 sharply higher today, reacting off of recent lows of the downtrend from August near congestion support at the 1,275 level. Technical indicators are neutral to slightly bearish overall, suggesting that direction is in question with a slight downward bias.

Cycle Analysis

We are 4 sessions into the beta phase rally of the cycle following the short-term cycle low (STCL) on October 2. The beta high (BH) is imminent and it could form at any time. The magnitude and duration of the beta phase rally suggests that cycle translation is in question. A quick reversal followed by a move below the last beta low (BL) near 1,273 during the beta phase decline would reconfirm the current bearish translation and favor additional short-term weakness. Alternatively, a brief, shallow beta phase decline followed by a move well above the last alpha high (AH) near 1,331 during the next alpha phase rally would signal the likely transition to a bullish translation. The window during which the next STCL is likely to occur is now through October 29, with our best estimate being in the October 18 to October 24 range.

  • Last STCL: October 2, 2013
  • Cycle Duration: 12 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: Now through 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 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 well below the recent short-term low near 1,273 would confirm a break below congestion support in the 1,275 area and 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 sharply higher today, reacting off of recent short-term lows and moving above the congestion zone in the 33 area. Technical indicators are neutral to slightly bearish overall, suggesting that direction is in question with a slight downward bias.

Short-term Outlook

  • Bullish Scenario: A close well above the 60-day moving average at 34.51 would predict a move up toward previous short-term highs of the uptrend from June near 37.
  • Bearish Scenario: A reversal and close below the recent low at 32.47 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 moderately lower today, moving down to a marginal new low for the downtrend from September. Technical indicators are moderately bearish overall, favoring a continuation of the decline.

Cycle Analysis

We are 5 sessions into the beta phase decline of the cycle following the short-term cycle low (STCL) on October 1. The move below the stop level at 100.88 has invalidated the cycle low signal that was generated on October 16. Cycle translation is in question. An extended beta phase decline that moves well below the last beta low (BL) at 101.46 would reconfirm the current bearish translation and favor additional short-term weakness. Alternatively, a quick rebound followed by an extended alpha phase rally of more than 5 sessions in duration that moves well above the recent short-term high at 103.80 would signal the likely transition to a bullish translation. The window during which the next STCL is likely to occur is now through November 1, with our best estimate being now through October 23.

  • Last STCL: October 1, 2013
  • Cycle Duration: 12 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: Now through November 1; best estimate now through October 23.
  • 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 near 104 would predict a move up toward the previous high of the uptrend from April at 110.31.
  • Bearish Scenario: A close below current levels would reconfirm the downtrend from September and predict a move down to congestion support in the 98 area.

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

Category: Forecasts, Short-term Forecasts


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