Stock Market Confirms Formation of Intermediate-term Low

| November 10, 2018

A cycle low signal was nearly generated this week, indicating that the latest intermediate-term cycle low (ITCL) likely formed during the week ending November 2. We are 2 weeks into the rally phase of the intermediate-term cycle from early November.

Intermediate-term cycle direction remains in question. 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, a quick reversal followed by an extended decline phase that moves well below the 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 moderately higher this week, returning to support at the lower boundary of the uptrend from 2016. Technical indicators are effectively neutral overall, suggesting that direction is in question.

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 November 2. We are 2 weeks into the rally phase of the cycle following the ITCL that occurred during the week ending November 2. Cycle translation is in question. 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, a quick reversal followed by an extended decline phase that moves well below the ITCL in March at 2,588 would signal the likely transition to a bearish translation. The window during which the next ITCL is likely to occur is from February 22 to April 19, with our best estimate being in the March 22 to April 19 range.

  • Last ITCL: November 2, 2018
  • Cycle Duration: 2 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: February 22 to April 19; best estimate in the March 22 to April 19 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 middle of the Bollinger bands at 2,820 would predict a move up toward the previous long-term high at 2,930.
  • Bearish Scenario: A reversal and weekly close below the recent short-term low at 2,658 would predict a return to congestion support in the 2,600 area.

Both scenarios are equally likely.

Category: Commentary, Market Update


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