Intermediate-term Forecast for March 24, 2018

| March 24, 2018

Stock Market Commentary

The stock market closed sharply lower this week, generating a cycle high signal that indicates a half cycle high (HCH) likely formed during the week ending March 16. We are 2 weeks into the initial decline phase of the intermediate-term cycle from February. The early formation of the latest intermediate-term high below the previous high in January suggests that long-term direction is now in question.

A quick rebound followed by a move above the January high at 2,873 would reconfirm the long-term uptrend and forecast additional gains. However, an extended decline phase that moves well below the last intermediate-term cycle low (ITCL) at 2,532 would signal the likely transition to a bearish intermediate-term translation and favor additional weakness heading into the next intermediate-term low in June or July.

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.

Technical Analysis

The index closed sharply lower this week, moving well below support at the lower boundary of the uptrend from 2016. Technical indicators are neutral to slightly bearish overall, suggesting that direction is in question with a slight downward bias.

Cycle Analysis

A cycle high signal was generated this week, indicating that a half cycle high (HCH) likely formed during the week ending March 16. We are 2 weeks into the initial decline phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending February 9. The early formation of the latest HCH suggests that cycle translation is in question. A quick rebound followed by an extended rally phase that moves above the HCH in January at 2,873 would reconfirm the current bullish translation and favor additional intermediate-term strength. However, an extended decline phase that moves well below the last ITCL at 2,532 would signal the likely transition to a bearish translation. The window during which the next ITCL is likely to occur is from June 1 to August 3, with our best estimate being in the June 29 to July 27 range.

  • Last ITCL: February 9, 2018
  • Cycle Duration: 6 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: June 1 to August 3; best estimate in the June 29 to July 27 range.
  • Setup Status: Cycle high setup occurred this week.
  • Trigger Status: Cycle high trigger occurred this week.
  • Signal Status: Cycle high signal was generated this week.
  • Stop Level: None active.

Intermediate-term Outlook

  • Bullish Scenario: A rebound and weekly close above the previous long-term high at 2,873 would reconfirm the cyclical uptrend and forecast additional gains.
  • Bearish Scenario: A weekly close well below the 50-week moving average at 2,554 would reconfirm the downtrend from January and predict a move down to congestion support in the 2,400 area.

Both scenarios are equally likely.

Category: Forecasts, Intermediate-term Forecasts


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