Short-term Forecast for May 18, 2020

| May 18, 2020

Stock Market Commentary

We are 5 sessions into the beta phase decline of the short-term cycle that began on March 24. A cycle low signal was generated today, indicating that the latest short-term cycle low (STCL) may have formed on May 14. Only a quick move below the stop level at 2,794 would invalidate the cycle low signal and suggest that the beta phase decline of the previous cycle is still in progress.

An extended beta phase decline that moves below the last short-term cycle low (STCL) at 2,191 would reconfirm the current bearish trend and forecast additional losses. Alternatively, a quick rebound followed by an extended alpha phase rally that moves well above the last beta high (BH) at 2,940 would signal the likely transition to a bullish short-term trend.

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, returning to previous highs of the uptrend from March. Technical indicators are slightly bullish overall, tentatively favoring a continuation of the advance.

Cycle Analysis

We are 5 sessions into the beta phase decline of the cycle following the short-term cycle low (STCL) on March 23. An extended beta phase decline that moves below the last STCL at 2,191 would reconfirm the current bearish translation and forecast additional losses. Alternatively, an extended beta phase rally that moves well above the last beta high (BH) at 2,940 would signal the likely transition to a bullish translation. The window during which the next STCL is likely to occur is now through May 22, with our best estimate being in the May 18 to May 22 range. A cycle low signal was generated today, indicating that the latest STCL may have formed on May 14. Only a quick move below the stop level at 2,794 would invalidate the cycle low signal and suggest that the beta phase decline of the previous cycle is still in progress.

  • Last STCL: March 23, 2020
  • Cycle Duration: 39 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: Now through May 22.
  • Setup Status: Cycle low setup occurred today.
  • Trigger Status: Cycle low trigger occurred today.
  • Signal Status: Cycle low signal was generated today.
  • Stop Level: 2,794

Short-term Outlook

  • Bullish Scenario: A close well above congestion resistance in the 3,000 area would reconfirm the uptrend from March and forecast additional gains.
  • Bearish Scenario: A reversal and close below the recent short-term low at 2,794 would predict a return to the 50-day moving average at 2,713.

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

Category: Forecasts, Short-term Forecasts


Comments are closed.