Intermediate-term Forecast for July 2, 2016

| July 2, 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 sharply higher this week, moving up toward previous long-term highs of the cyclical bull market from 2009. It remains likely that a long-term top is forming. A weekly close well below critical congestion support in the 1,875 area would confirm the start of a new cyclical downtrend and forecast substantial losses during the next 12 to 18 months. Technical indicators are slightly bullish overall, tentatively favoring a return to previous highs of the bull market.

Cycle Analysis

We are 4 weeks into the second decline phase of the cycle following the intermediate-term low (ITCL) that occurred during the week ending February 12. Cycle translation is in question. An extended decline phase that moves below the last ITCL at 1,810 would reconfirm the current bearish translation and favor additional intermediate-term weakness. Alternatively, a quick rebound followed by an extended rally phase that moves well above the last half cycle high (HCH) at 2,121 would signal the likely transition to a bullish translation. The window during which the next ITCL is likely to occur is now through August 5, with our best estimate being now through July 29. The latest ITCL may have formed this week, although we would need to see additional strength next week to confirm that development.

  • Last ITCL: February 12, 2016
  • Cycle Duration: 20 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: Now through to August 5; best estimate now through July 29.
  • 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 at the 2,125 level would reconfirm the long-term uptrend and forecast additional gains.
  • Bearish Scenario: A reversal and close below the recent short-term low at 2,031 would predict a move down toward congestion support in the 1,875 area.

Both scenarios are equally likely.

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 low for the downtrend from 2014. Technical indicators are extremely bearish overall, strongly favoring a continuation of the decline.

Cycle Analysis

We are 5 weeks into the decline phase of the cycle following the intermediate-term cycle high (ITCH) that occurred during the week ending June 3. The magnitude of the current decline phase reconfirms the current bearish translation and favors additional intermediate-term weakness. The window during which the next ITCH is likely to occur is from August 19 to September 16.

  • Last ITCH: June 3, 2016
  • Cycle Duration: 5 weeks
  • Cycle Translation: Bearish
  • Next ITCH Window: August 19 to September 16.
  • 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 congestion resistance in the 1.70% area would predict a move up toward congestion resistance at the 2.00% level.
  • Bearish Scenario: A close below current levels would reconfirm the downtrend from 2014 and forecast additional losses.

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 slightly higher this week, holding above recent short-term lows near the bottom of the recent trading range. The index has been confined to a trading range between 93 and 100 since early 2015 and a move well outside of this area will predict 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

The character of price behavior during the last 4 weeks has caused a change to our preferred scenario and it is now likely that the low during the week ending May 6 was an intermediate-term cycle low (ITCL) and not a half cycle low (HCL). We are 4 weeks into the second rally phase of the cycle following the ITCL that occurred during the week ending May 6. The move well below the previous ITCL during the decline phase of the previous cycle 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 from September 2 to October 21, with our best estimate being in the September 9 to October 7 range.

  • Last ITCL: May 6, 2016
  • Cycle Duration: 9 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: September 2 to October 21; best estimate in the September 9 to October 7 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 the recent short-term high at 96.11 would predict a move up toward congestion resistance at the top of the recent trading range in the 100 area.
  • Bearish Scenario: A reversal and close below congestion support at the bottom of the recent trading range at the 93 level would reconfirm the downtrend from 2015 and forecast additional losses.

Both scenarios are equally likely.

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 sharply higher this week, moving up to a new high for the uptrend from January. Technical indicators are extremely bullish overall, strongly favoring a continuation of the advance.

Cycle Analysis

We are 5 weeks into the second rally phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending March 25. The magnitude and duration of the current rally phase reconfirms the current bullish translation and favors additional intermediate-term strength. The window during which the next ITCL is likely to occur is from July 15 to September 2, with our best estimate being in the July 15 to August 12 range.

  • Last ITCL: March 25, 2016
  • Cycle Duration: 14 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: July 15 to September 2; best estimate in the July 15 to August 12 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 reconfirm the uptrend from January and forecast additional gains.
  • Bearish Scenario: A reversal and close below the middle of the Bollinger bands at 1,259 would predict a move down toward congestion support in the 1,200 area.

The bullish scenario is highly likely (>80% 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, returning to previous highs of the uptrend from February. Technical indicators are moderately bullish overall, favoring a continuation of the advance.

Cycle Analysis

We are 5 weeks into the decline phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending February 12. Cycle translation is in question. An extended decline phase that moves below the last ITCL at 26.05 would reconfirm the current bearish translation and favor additional intermediate-term weakness. Alternatively, a quick rebound followed by an extended rally phase that moves well above the last intermediate-term cycle high (ITCH) at 49.56 would signal the likely transition to a bullish translation. The window during which the next ITCL is likely to occur is now through September 16, with our best estimate being in the July 8 to August 5 range.

  • Last ITCL: February 12, 2016
  • Cycle Duration: 20 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: Now through to September 16; best estimate in the July 8 to August 5 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 recent intermediate-term high at 49.56 would reconfirm the uptrend from February and forecast additional gains.
  • Bearish Scenario: A reversal and close well below the middle of the Bollinger bands at 42.95 would predict a move down toward the previous long-term low at 29.02.

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

Category: Forecasts, Intermediate-term Forecasts


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