Stock Market Attempts to Extend Gains

| July 11, 2020

The violent rebound off of the March low is attempting to resume after consolidating since early June. A close above the recent high near 3,200 on the S&P 500 index would forecast additional strength in July and August.

However, intermediate-term direction remains unclear following the severe decline in March, and a move above the February high would be required to reconfirm the long-term uptrend.

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, moving up toward previous highs of the uptrend from March. Technical indicators are slightly bullish overall, tentatively favoring a return to previous highs of the advance.

Cycle Analysis

We are 16 weeks into the rally phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending March 27. The magnitude of the last decline phase signals the likely transition to a bearish translation and favors additional weakness. The window during which the next ITCL is likely to occur is now through September 11, with our best estimate being in the August 7 to September 4 range.

  • Last ITCL: March 27, 2019
  • Cycle Duration: 15 weeks
  • Cycle Translation: Bearish
  • Next ITCL Window: Now through September 11; best estimate in the August 7 to September 4 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 above the previous short-term high at 3,200 would reconfirm the uptrend from March and forecast additional gains.
  • Bearish Scenario: A reversal and weekly close below the middle of the Bollinger bands at 2,888 would predict a return to the 200-week moving average at 2,704.

Both scenarios are equally likely.

Category: Commentary, Market Update

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