Short-term Forecast for October 16, 2018

| October 16, 2018

Stock Market Commentary

A cycle low signal was generated today, indicating that the latest short-term cycle low (STCL) likely formed on October 11. Only a quick move below the stop level at 2,728 would invalidate the signal and suggest that the short-term cycle from August is still in progress.

The magnitude and duration of the last beta phase decline signal the likely transition to a bearish trend and favor additional weakness during the new short-term cycle.

S&P 500 Index Daily Chart Analyses

The following technical and cycle analyses provide short-term forecasts for the S&P 500 index. For intermediate-term outlooks, see the latest intermediate-term forecast.

Technical Analysis

The index closed sharply higher today, reacting further off of previous short-term lows of the violent downtrend from early October and continuing a test of support at the 200-day moving average. Technical indicators are moderately bearish overall, favoring a return to previous lows of the decline.

Cycle Analysis

We are 18 sessions into the beta phase decline of the cycle following the short-term cycle low (STCL) on August 15. A cycle low signal was generated today, indicating that the latest STCL likely formed on October 11. Only a quick move below the stop level at 2,728 would invalidate the signal and suggest that the cycle from August is still in progress. The magnitude and duration of the current beta phase decline signal the likely transition to a bearish translation and favor additional short-term weakness. The window during which the next STCL is likely to occur is now through October 17.

  • Last STCL: August 15, 2018
  • Cycle Duration: 43 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: Now through October 17.
  • Setup Status: Cycle low setup occurred today.
  • Trigger Status: Cycle low trigger occurred today.
  • Signal Status: Cycle low signal was generated today.
  • Stop Level: 2,728

Short-term Outlook

  • Bullish Scenario: A rebound and close above the previous short-term high at 2,937 would reconfirm the uptrend from April and forecast additional gains.
  • Bearish Scenario: A close below the recent short-term low at 2,728 would predict a return to congestion support in the 2,700 area.

The bearish scenario is more likely (~70% probable).

Category: Forecasts, Short-term Forecasts


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