Intermediate-term Forecast for October 13, 2018

| October 13, 2018

Stock Market Commentary

We are 3 weeks into the second decline phase of the intermediate-term cycle from March.

Intermediate-term cycle direction remains in question. A quick rebound followed by an extended rally phase that moves well above the September high at 2,930 would reconfirm the current bullish trend and forecast additional gains. However, an extended decline phase that moves well below the last intermediate-term cycle low (ITCL) in March at 2,588 would signal the likely transition to a bearish trend and favor additional intermediate-term weakness heading into 2019.

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, retreating further from previous long-term highs and beginning a test of 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

We are 3 weeks into the second decline phase of the cycle following the ITCL that occurred during the week ending March 23. Cycle translation is in question. A quick rebound followed by an extended rally phase that moves well above the last half cycle high (HCH) at 2,930 would reconfirm the current bullish translation and favor additional intermediate-term strength. Alternatively, 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 November 2.

  • Last ITCL: March 23, 2018
  • Cycle Duration: 29 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: Now through November 2.
  • 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 long-term high at 2,930 would reconfirm the cyclical uptrend and forecast additional gains.
  • Bearish Scenario: A weekly close well below the 50-week moving average at 2,743 would predict a return to congestion support in the 2,600 area.

Both scenarios are equally likely.

Category: Forecasts, Intermediate-term Forecasts


Comments are closed.