Intermediate-term Forecast for October 29, 2016

| October 29, 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 lower this week, returning to recent short-term lows below previous highs of the cyclical bull market from 2009 and continuing a test of 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 neutral to slightly bearish overall, suggesting that direction is in question with a slight downward bias.

Cycle Analysis

We are 4 weeks into the second decline phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending July 1. The magnitude and duration of the first rally phase of the current cycle 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 now through December 16, with our best estimate being in the November 11 to December 9 range.

  • Last ITCL: July 1, 2016
  • Cycle Duration: 18 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: Now through 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 rebound and weekly close above the previous intermediate-term high at 2,186 would reconfirm the long-term uptrend and forecast additional gains.
  • Bearish Scenario: A close well below congestion support in the 2,125 area would predict a move down to the previous short-term low at 2,031.

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

Cycle Analysis

We are 4 weeks into the rally phase of the cycle following the intermediate-term cycle high (ITCH) that occurred during the week ending September 16. The quick move above the last ITCH during the current rally phase signals the likely transition to a bullish translation and favors additional intermediate-term strength. 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: 6 weeks
  • Cycle Translation: Bullish
  • 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 weekly close above current levels would reconfirm the uptrend from July and predict a move up toward congestion resistance at the 2.00% level.
  • Bearish Scenario: A reversal and close below the middle of the Bollinger bands at 1.61% would predict a move down toward the previous long-term low at 1.37%.

The bullish 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 lower this week, holding in the upper 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 moderately bullish overall, favoring a continuation of the uptrend from May.

Cycle Analysis

We are 10 weeks into the rally phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending August 19. The magnitude and duration of the current 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 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: 10 weeks
  • Cycle Translation: Bullish
  • 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 weekly close above the recent short-term high at 98.69 would forecast a return to the top of the recent trading range in the 100 area.
  • Bearish Scenario: A reversal and close below the middle of the Bollinger bands at 96.15 would predict a return to congestion support at the bottom of the recent trading range at the 93 level.

The bullish scenario is more likely (~70% 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 recent short-term lows below support at the lower boundary of the uptrend from January. Technical indicators are slightly bearish overall, tentatively favoring a continuation of the decline 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 October 7. We are 3 weeks into the rally phase of the cycle following the ITCL that occurred during the week ending October 7. An extended rally phase that moves above the last intermediate-term cycle high (ITCH) at 1,369 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 1,243 would signal the likely transition to a bearish translation. The window during which the next ITCL is likely to occur is from January 27 to March 17, with our best estimate being in the January 27 to February 24 range.

  • Last ITCL: October 7, 2016
  • Cycle Duration: 3 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: January 27 to March 17; best estimate in the January 27 to February 24 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 intermediate-term high at 1,369 would reconfirm the uptrend from January and forecast additional gains.
  • Bearish Scenario: A close below the recent short-term low at 1,252 would predict a move down to 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 moderately lower this week, retreating from recent 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 13 weeks into the rally phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending August 5. The latest intermediate-term cycle high (ITCH) may have formed during the week ending October 21, although we would need to see additional weakness to confirm that development. 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 previous 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: 13 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 well above the recent short-term high at 50.85 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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