Intermediate-term Forecast for October 1, 2016

| October 1, 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 slightly higher this week, holding below previous highs of the cyclical bull market from 2009 above congestion support in the 2,125 area. Although the index has moved up to new nominal all-time highs, it remains likely that a long-term top is forming. A reversal followed by 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 continuation of the uptrend from February.

Cycle Analysis

A cycle low signal was nearly generated today, indicating that a half cycle low (HCL) likely formed during the week ending September 16. We are 3 weeks into the second rally phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending July 1. The magnitude of the previous rally phase signals the likely transition to a bullish translation and favors additional intermediate-term strength. The window during which the next ITCL is likely to occur is from October 14 to December 16, with our best estimate being in the November 11 to December 9 range.

  • Last ITCL: July 1, 2016
  • Cycle Duration: 14 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: October 14 to December 16; best estimate in the November 11 to December 9 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 previous intermediate-term high at 2,186 would reconfirm the long-term uptrend and forecast additional gains.
  • Bearish Scenario: A reversal and close well below congestion support in the 2,125 area would predict a move down to the previous short-term low at 2,031.

The bullish scenario is slightly more likely (~60% 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 slightly lower this week, holding below recent short-term highs above previous lows of the downtrend from 2014. Technical indicators are neutral to slightly bearish overall, suggesting that direction is in question with a slight downward bias.

Cycle Analysis

The decline during the last 2 weeks indicates that the latest intermediate-term cycle high (ITCH) likely formed during the week ending September 16. We are 2 weeks into the decline phase of the cycle following the ITCH that occurred during the week ending September 16. An extended decline phase that moves below the last intermediate-term cycle low (ITCL) at 1.34% 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 ITCH at 1.75% would signal the likely transition to a bullish translation. The window during which the next ITCH is likely to occur is from December 9 to January 6.

  • Last ITCH: September 16, 2016
  • Cycle Duration: 2 weeks
  • Cycle Translation: Bearish
  • Next ITCH Window: December 9 to January 6.
  • 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 1.70% area would predict a move up toward congestion resistance at the 2.00% level.
  • Bearish Scenario: A close below the previous long-term low at 1.37% would reconfirm the downtrend from 2014 and forecast additional losses.

Both scenarios are equally likely.

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 in the lower half 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

We are 6 weeks into the rally phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending August 19. A quick reversal followed by an extended decline phase that moves below the ITCL in May at 91.88 would reconfirm the current bearish translation and favor additional intermediate-term weakness. Alternatively, an extended rally phase that moves well above the half cycle high (HCH) in July at 97.52 would signal the likely transition to a bullish translation. The window during which the next ITCL is likely to occur is from December 23 to February 10, with our best estimate being in the December 30 to January 27 range.

  • Last ITCL: August 19, 2016
  • Cycle Duration: 6 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: December 23 to February 10; best estimate in the December 30 to January 27 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 previous short-term high at 97.52 would predict a move up toward congestion resistance at the top of the recent trading range in the 100 area.
  • Bearish Scenario: A 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 lower this week, moving below support at the lower boundary of the uptrend from January. Technical indicators are neutral to slightly bullish overall, suggesting that direction is in question with a slight upward bias.

Cycle Analysis

We are 12 weeks into the decline phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending June 3. A cycle low signal was generated during the week ending September 23, indicating that the latest ITCL likely formed during the week ending September 16. Only a quick move below the stop level at 1,310 next week would invalidate the signal and suggest that the cycle from June is still in progress. The magnitude and duration of the last 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 now through October 7.

  • Last ITCL: June 3, 2016
  • Cycle Duration: 18 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: Now through October 7.
  • Setup Status: Cycle low setup occurred during the week ending September 23.
  • Trigger Status: Cycle low trigger occurred during the week ending September 23.
  • Signal Status: Cycle low signal was generated during the week ending September 23.
  • Stop Level: 1,310

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close above the previous intermediate-term high at 1,369 would reconfirm the uptrend from January and forecast additional gains.
  • Bearish Scenario: A close well below congestion support at the 1,300 level would predict a move down toward congestion support in the 1,200 area.

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 closed sharply higher this week, moving up toward previous highs of the uptrend from February. Technical indicators are neutral to slightly bullish overall, suggesting that direction is in question with a slight upward bias.

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 August 5. Cycle translation is in question. A quick reversal followed by an extended decline phase that moves below the ITCL in February at 26.05 would reconfirm the current bearish translation and favor additional intermediate-term weakness. Alternatively, 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 from November 18 to April 7, with our best estimate being in the January 13 to February 10 range.

  • Last ITCL: August 5, 2016
  • Cycle Duration: 9 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: November 18 to April 7; best estimate in the January 13 to February 10 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 previous intermediate-term high at 49.56 would reconfirm the uptrend from February and forecast additional gains.
  • Bearish Scenario: A reversal and close well below congestion support in the 40 area would predict a move down toward congestion support at the 30 level.

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

Category: Forecasts, Intermediate-term Forecasts


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