Short-term Forecast for May 31, 2016

| May 31, 2016

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 slightly lower today, holding near previous highs of the uptrend from February. Technical indicators are slightly bullish overall, tentatively favoring a continuation of the advance.

Cycle Analysis

We are 7 sessions into the alpha phase rally of the cycle following the short-term cycle low (STCL) on May 19. Cycle translation is in question. An extended alpha phase rally that moves above the last alpha high (AH) at 2,102 would reconfirm the current bullish translation and favor additional short-term strength. Alternatively, a quick reversal followed by an extended alpha phase decline that moves well below the last STCL at 2,026 would signal the likely transition to a bearish translation. The window during which the next STCL is likely to occur is from July 5 to July 25, with our best estimate being in the July 13 to July 19 range.

  • Last STCL: May 19, 2016
  • Cycle Duration: 7 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: July 5 to July 25; best estimate in the July 13 to July 19 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 2,100 level would reconfirm the uptrend from February and forecast additional gains.
  • Bearish Scenario: A reversal and close well below congestion support at the 2,040 level would reconfirm the downtrend from April and predict a return to congestion support in the 2,000 area.

The bullish scenario is slightly more likely (~60% 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 slightly lower today, holding near the middle of the recent trading range. Yields have been confined to a trading range between 1.70% and 1.98% since late January, and a close well outside of this area will signal the direction of the next meaningful move with a high degree of statistical confidence. Technical indicators are effectively neutral overall, suggesting that direction is in question.

Cycle Analysis

We are 11 sessions into the rally phase of the cycle following the short-term cycle high (STCH) on April 26. Cycle translation is in question. An extended rally phase that moves above the STCH in March at 1.98% would reconfirm the current bullish translation and favor additional short-term strength. Alternatively, an extended decline phase that moves well below the alpha low (AL) in April at 1.69% would signal the likely transition to a bearish translation. The window during which the next STCH is likely to occur is now through June 8, with our best estimate being now through June 2. The latest STCH may have formed on May 25, although we would need to see additional weakness during the next session to confirm that development.

  • Last STCH: April 26, 2016
  • Cycle Duration: 24 sessions
  • Cycle Translation: Bullish
  • Next STCH Window: Now through June 8; best estimate now through June 2.
  • 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 above the recent short-term high at 1.88% would predict a move up to congestion resistance at the top of the trading range in the 1.98% area.
  • Bearish Scenario: A close below congestion support at the bottom of the trading range in the 1.70% area would reconfirm the downtrend from May and forecast additional losses.

Both scenarios are equally likely.

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 higher today, moving up to a new high for the uptrend from early May. Technical indicators are bullish overall, strongly favoring a continuation of the advance.

Cycle Analysis

A cycle low signal was generated today, indicating that the latest short-term cycle low (STCL) likely formed on May 26. We are 2 sessions into the alpha phase rally of the cycle following the STCL on May 26. The formation of the latest STCL well above the STCL in early May signals the likely transition to a bullish translation and favors additional short-term strength. The window during which the next STCL is likely to occur is from June 22 to July 7, with our best estimate being in the June 27 to July 1 range.

  • Last STCL: May 26, 2016
  • Cycle Duration: 2 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: June 22 to July 7; best estimate in the June 27 to July 1 range.
  • Setup Status: Cycle low setup occurred today.
  • Trigger Status: Cycle low trigger occurred today.
  • Signal Status: Cycle low signal was generated today.
  • Stop Level: None active.

Short-term Outlook

  • Bullish Scenario: A close above current levels would reconfirm the uptrend from early May and forecast additional gains.
  • Bearish Scenario: A reversal and close below congestion support in the 94 area would predict a return to the previous short-term low at 92.62.

The bullish 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 rebounded from large early losses to close slightly higher today, continuing a test of congestion support in the 1,215 area. Technical indicators are bearish overall, strongly favoring a continuation of the decline from early May.

The magnitude and duration of the decline from May 18 has caused a change to our preferred scenario and it is now likely that the beta phase decline of the current cycle is in progress. We are 5 sessions into the beta phase decline of the cycle following the short-term cycle low (STCL) on May 12. The magnitude and duration of the beta phase decline signals the likely transition to a bearish translation and favors additional short-term weakness. The window during which the next STCL is likely to occur is now through June 10, with our best estimate being now through June 6. The large intrasession rebound today suggests that the latest STCL may have formed today, although we would need to see a strong advance during the next session to confirm that development.

  • Last STCL: May 12, 2016
  • Cycle Duration: 12 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: Now through June 10; best estimate now through June 6.
  • 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 above the previous short-term high at 1,295 would reconfirm the uptrend from December and forecast additional gains.
  • Bearish Scenario: A close well below congestion support in the 1,215 area would reconfirm the downtrend from early May and predict a move down toward congestion support at the 1,160 level.

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

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 near recent highs of the uptrend from February. Technical indicators are moderately bullish overall, favoring a continuation of the advance.

Cycle Analysis

The sideways consolidation during the last 3 sessions indicates that the beta high (BH) of the current cycle likely formed on May 26. We are 3 sessions into the beta phase decline of the cycle following the short-term cycle low (STCL) on May 10. A quick rebound followed by an extended alpha phase rally that moves well above the last BH at 50.21 would reconfirm the current bullish translation and favor additional short-term strength. Alternatively, an extended beta phase decline that moves well below the STCL in April at 42.96 would signal the likely transition to a bearish translation. The window during which the next STCL is likely to occur is now through June 10, with our best estimate being now through June 6.

  • Last STCL: May 10, 2016
  • Cycle Duration: 15 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: Now through June 10; best estimate now through June 6.
  • 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 recent short-term high at 49.74 would reconfirm the uptrend from February and forecast additional gains.
  • Bearish Scenario: A reversal and close well below uptrend support near 47.90 would predict a move down toward congestion support in the 38 area.

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

Category: Forecasts, Short-term Forecasts


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