Intermediate-term Forecast for January 23, 2016

| January 23, 2016

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 rebounded from large early losses to close moderately higher this week, reacting off of recent intermediate-term lows below previous long-term highs of the cyclical bull market from 2009. The uptrend from 2011 moved higher at an unsustainable rate and the breakdown in August signals the likely start of a violent correction. Technical indicators are moderately bearish overall, favoring a continuation of the downtrend from July.

Cycle Analysis

We are 11 weeks into the decline phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending October 2. The magnitude and duration of the previous decline phase signals the likely transition to a bearish translation and favors additional intermediate-term weakness. The window during which the next ITCL is likely to occur is now through March 18, with our best estimate being now through February 19. The latest ITCL may have formed this week, although we would need to see a strong advance next week to confirm that development.

  • Last ITCL: October 2, 2015
  • Cycle Duration: 17 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: Now through March 18; best estimate now through February 19.
  • 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 middle of the Bollinger bands at 2,011 would predict a return to the previous long-term high at 2,127.
  • Bearish Scenario: A close well below congestion support in the 1,880 area would reconfirm the downtrend from 2015 and forecast additional losses.

The bearish scenario is more likely (~70% 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 rebounded from large early losses to close slightly higher this week, holding near recent short-term lows below support at the lower boundary of the uptrend from 2015. Technical indicators are slightly bearish overall, tentatively favoring a continuation of the decline from November.

Cycle Analysis

We are 11 weeks into the decline phase of the cycle following the intermediate-term cycle high (ITCH) that occurred during the week ending November 13. Cycle translation is in question. A quick rebound followed by an extended rally phase that moves well above the intermediate-term cycle high (ITCH) in June at 2.30% would reconfirm the current bullish translation and favor additional intermediate-term strength. Alternatively, an extended decline phase that moves well below the half cycle low (HCL) in August at 1.90% would signal the likely transition to a bearish translation. The window during which the next ITCH is likely to occur is from January 29 to February 26.

  • Last ITCH: November 13, 2015
  • Cycle Duration: 11 weeks
  • Cycle Translation: Bullish
  • Next ITCH Window: January 29 to February 26.
  • 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 well above congestion resistance in the 2.50% area would reconfirm the uptrend from 2015 and forecast additional gains.
  • Bearish Scenario: A close well below congestion support at the 2.00% level would predict a move down toward the previous low of the downtrend from 2014 at 1.67%.

The bearish 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 moderately higher this week, moving up toward previous long-term highs of the violent uptrend from 2014. Technical indicators are moderately bullish overall, favoring a return to previous highs of the advance.

Cycle Analysis

We are 6 weeks into the second rally phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending October 16. An extended rally phase that moves well above the half cycle high (HCH) in early 2015 at 100.65 would reconfirm the current bullish translation and favor additional intermediate-term strength. Alternatively, a quick reversal followed by an extended decline phase that moves well below the last ITCL at 93.83 would signal the likely transition to a bearish translation. The window during which the next ITCL is likely to occur is from February 19 to April 8, with our best estimate being in the February 19 to March 18 range.

  • Last ITCL: October 16, 2015
  • Cycle Duration: 14 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: February 19 to April 8; best estimate in the February 19 to March 18 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 the previous long-term high at 100.65 would reconfirm the uptrend from 2014 and forecast additional gains.
  • Bearish Scenario: A reversal and close below the middle of the Bollinger bands at 97.65 would predict a return to congestion support in the 94 area.

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

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 higher this week, holding near recent short-term highs above previous long-term lows of the cyclical downtrend from 2011. Technical indicators are slightly bearish overall, tentatively favoring a return to previous lows of the decline.

Cycle Analysis

We are 8 weeks into the rally phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending December 4. A quick reversal followed by an extended decline phase that moves well below the last ITCL at 1,045 would reconfirm the current bearish translation and favor additional intermediate-term weakness. Alternatively, an extended rally phase that approaches the half cycle high (HCH) in October at 1,177 would suggest that cycle translation is in question. The window during which the next ITCL is likely to occur is from March 18 to May 6, with our best estimate being in the March 18 to April 15 range.

  • Last ITCL: December 4, 2015
  • Cycle Duration: 8 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: March 18 to May 6; best estimate in the¬†March 18 to April 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 weekly close well above congestion resistance in the 1,100 area would predict a move up to congestion resistance at the 1,150 level.
  • Bearish Scenario: A reversal and close below the recent long-term low at 1,056 would reconfirm the cyclical downtrend from 2011 and forecast additional losses.

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 rebounded from large early losses to close moderately higher this week, reacting off of recent lows of the downtrend from 2014. Technical indicators are moderately bearish overall, favoring a continuation of the decline.

Cycle Analysis

We are 15 weeks into the decline phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending August 28. The magnitude and duration of the current decline phase reconfirms the current bearish translation and favors additional intermediate-term weakness. The window during which the next ITCL is likely to occur is now through April 22, with our best estimate being now through February 19. The latest ITCL may have formed this week, although we would need to see additional strength to confirm that development.

  • Last ITCL: August 28, 2015
  • Cycle Duration: 22 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: Now through April 22; best estimate now through February 19.
  • 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 middle of the Bollinger bands at 41.01 would predict a move up toward congestion resistance in the 52.50 area.
  • Bearish Scenario: A close below the recent long-term low at 30.17 would reconfirm the downtrend from 2014 and forecast additional losses.

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

Category: Forecasts, Intermediate-term Forecasts


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