Short-term Forecast for May 22, 2020

| May 22, 2020

Stock Market Commentary

We are 7 sessions into the alpha phase rally of the short-term cycle that began on May 14.

A quick reversal followed by an extended alpha phase decline that moves well below the last short-term cycle low (STCL) at 2,766 would reconfirm the current bearish trend and forecast additional losses. Alternatively, 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 slightly higher today, holding near recent highs of the uptrend from March. Technical indicators are slightly bullish overall, tentatively favoring a continuation of the advance.

Cycle Analysis

We are 7 sessions into the alpha phase rally of the cycle following the short-term cycle low (STCL) on May 14. A quick reversal followed by an extended alpha phase decline that moves well below the last STCL at 2,766 would reconfirm the current bearish translation and forecast additional losses. Alternatively, 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 translation. The window during which the next STCL is likely to occur is from June 24 to July 15, with our best estimate being in the July 6 to July 13 range.

  • Last STCL: May 14, 2020
  • Cycle Duration: 7 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: June 24 to July 15; best estimate in the July 6 to July 13 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

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 middle of the Bollinger bands at 2,894 would predict a return to the 50-day moving average at 2,731.

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

Category: Forecasts, Short-term Forecasts


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