Intermediate-term Forecast for January 30, 2016

| January 30, 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 closed moderately higher this week, reacting further 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

A cycle low signal was nearly generated this week, indicating that the latest intermediate-term cycle low (ITCL) likely formed during the week ending January 22. We are 2 weeks into the rally phase of the cycle following the ITCL that occurred during the week ending January 22. The magnitude and duration of the last 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 from May 6 to July 8, with our best estimate being in the June 3 to July 1 range.

  • Last ITCL: January 22, 2016
  • Cycle Duration: 2 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: May 6 to July 8; best estimate in the June 3 to July 1 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 middle of the Bollinger bands at 2,010 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 closed sharply lower this week, moving down to a new short-term low below support at the lower boundary of the uptrend from 2015. Technical indicators are bearish overall, strongly favoring a continuation of the decline from November.

Cycle Analysis

The magnitude of the decline during the last 4 weeks has caused a change to our preferred scenario and it is now likely that a half cycle high (HCH) occurred during the week ending December 31. We are 4 weeks into the second 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 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 February 26 to May 20, with our best estimate being in the March 11 to April 8 range.

  • Last ITCH: November 13, 2015
  • Cycle Duration: 12 weeks
  • Cycle Translation: Bullish
  • Next ITCH Window: February 26 to May 20; best estimate in the March 11 to April 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 rebound and weekly close well above congestion resistance at the 2.30% level would predict a return to congestion resistance in the 2.50% area.
  • Bearish Scenario: A close below current levels would predict a move down toward the previous low of the downtrend from 2014 at 1.67%.

The bearish scenario is highly likely (>80% 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 near unchanged this week, holding near previous long-term highs of the violent uptrend from 2014. Technical indicators are moderately bullish overall, favoring a continuation of the advance.

Cycle Analysis

We are 7 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: 15 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 97.87 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 moderately higher this week, reacting further off of previous long-term lows of the cyclical downtrend from 2011. Technical indicators are effectively neutral overall, suggesting that direction is in question.

Cycle Analysis

We are 9 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: 9 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 above current levels would predict a move up to congestion resistance at the 1,150 level.
  • Bearish Scenario: A reversal and close below the previous long-term low at 1,056 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 moderately higher this week, reacting further off of previous lows of the downtrend from 2014. Technical indicators are slightly bearish overall, tentatively favoring a continuation of the decline.

Cycle Analysis

We are 16 weeks into the decline phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending August 28. A cycle low signal was generated this week, indicating that the latest ITCL likely formed during the week ending January 22. Only a quick move below the stop level at 30.17 would invalidate the signal and suggest that the cycle from August is still in progress. 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.

  • Last ITCL: August 28, 2015
  • Cycle Duration: 23 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: Now through April 22; best estimate now through February 19.
  • Setup Status: Cycle low setup occurred this week.
  • Trigger Status: Cycle low trigger occurred this week.
  • Signal Status: Cycle low signal was generated this week.
  • Stop Level: 30.17

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close above the middle of the Bollinger bands at 40.46 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 slightly more likely (~60% probable).

Category: Forecasts, Intermediate-term Forecasts


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