Intermediate-term Forecast for September 1, 2018

| September 1, 2018

Stock Market Commentary

The duration of the advance from July has caused a slight change to our preferred scenario, and it is now likely that the current intermediate-term cycle began in March. We are 9 weeks into the second rally phase of the intermediate-term cycle from March.

Long-term direction remains in question. An extended rally phase that moves well above the January high at 2,873 would reconfirm the long-term uptrend and forecast additional gains. However, a quick reversal followed by an extended decline phase that moves well below the intermediate-term cycle low (ITCL) in March at 2,588 would signal the likely transition to a bearish intermediate-term translation and favor additional intermediate-term weakness.

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 moderately higher this week, moving up to a marginal new high for the uptrend from 2016. Technical indicators are extremely bullish overall, strongly favoring a continuation of the advance.

Cycle Analysis

The duration of the advance from July has caused a slight change to our preferred scenario, and it is now likely that the last intermediate-term cycle low (ITCL) occurred during the week ending March 23. We are 9 weeks into the second rally phase of the cycle following the ITCL that occurred during the week ending March 23. Cycle translation is in question. An extended rally phase that moves well above the half cycle high (HCH) in January at 2,873 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 2,588 would signal the likely transition to a bearish translation. The window during which the next ITCL is likely to occur is now through October 5.

  • Last ITCL: March 23, 2018
  • Cycle Duration: 23 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: Now through October 5.
  • 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 current levels would reconfirm the cyclical uptrend and forecast additional gains.
  • Bearish Scenario: A reversal and weekly close below the middle of the Bollinger bands at 2,771 would predict a return to the 50-week moving average at 2,703.

The bullish scenario is highly likely (>80% probable).

Category: Forecasts, Intermediate-term Forecasts


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