Stock Market Forms Important Intermediate-term Low

| June 8, 2019

A cycle low signal was nearly generated this week, indicating that a new intermediate-term cycle has likely begun. The relatively small magnitude of the decline following the high in April suggests that the uptrend from December will likely continue.

Intermediate-term cycle direction is in question. A quick reversal followed by an extended decline phase that moves below the intermediate-term cycle low (ITCL) in December at 2,347 would reconfirm the current bearish trend and forecast additional losses. Alternatively, an extended rally phase that moves well above the intermediate-term half cycle high (HCH) in September at 2,941 would signal the likely transition to a bullish trend.

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 higher this week, moving up toward previous highs of the uptrend from December. Technical indicators are moderately bullish overall, favoring a return to previous highs of the advance.

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 May 31. We are 1 week into the rally phase of the cycle following the ITCL that occurred during the week ending May 31. Cycle translation is in question. A quick reversal followed by an extended decline phase that moves below the ITCL in December at 2,347 would reconfirm the current bearish translation and favor additional intermediate-term weakness. Alternatively, an extended rally phase that moves well above the half cycle high (HCH) in September at 2,941 would signal the likely transition to a bullish translation. The window during which the next ITCL is likely to occur is from September 27 to November 29, with our best estimate being in the October 25 to November 22 range.

  • Last ITCL: May 31, 2019
  • Cycle Duration: 1 week
  • Cycle Translation: Bearish
  • Next ITCL Window: September 27 to November 29; best estimate in the October 25 to November 22 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 congestion resistance in the 2,950 area would reconfirm the uptrend from December and forecast additional gains.
  • Bearish Scenario: A reversal and weekly close below the recent short-term low at 2,752 would predict a move down to the bottom of the Bollinger bands at 2,665.

The bullish scenario is slightly more likely (~60% probable).

Category: Commentary, Market Update


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