Potential Formation of Intermediate-term High in Stock Market

| March 9, 2019

We are 11 weeks into the rally phase of the intermediate-term cycle that began in December. The intermediate-term cycle high (ITCH) of the current cycle may have formed this week, although we would need to see additional weakness next week to confirm that development.

The magnitude of the last decline phase signals the likely transition to a bearish trend and favors additional weakness during the next decline phase heading into the intermediate-term low in May or June.

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 from recent highs of the uptrend from December. Technical indicators are effectively neutral overall, suggesting that direction is in question.

Cycle Analysis

We are 11 weeks into the rally phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending December 21. The intermediate-term cycle high (ITCH) may have formed this week, although we would need to see additional weakness next week to confirm that development. The magnitude of the last decline phase signals the likely transition to a bearish translation and favors additional intermediate-term weakness. The window during which the next ITCL is likely to occur is from April 19 to June 21, with our best estimate being in the May 17 to June 14 range.

  • Last ITCL: December 21, 2018
  • Cycle Duration: 11 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: April 19 to June 21; best estimate in the May 17 to June 14 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 rebound and weekly close above the recent short-term high at 2,814 would reconfirm the uptrend from December and forecast a move up to the top of the Bollinger bands at 2,876.
  • Bearish Scenario: A weekly close below congestion support at the 2,600 level would predict a return to the previous low of the downtrend from October at 2,400.

Both scenarios are equally likely.

Category: Commentary, Market Update


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