Short-term Forecast for July 23, 2020

| July 23, 2020

Stock Market Commentary

We are 18 sessions into the alpha phase rally of the short-term cycle that began on June 27. The alpha high (AH) of the current cycle is overdue and it could form at any time, if it has not already occurred on July 22.

An extended alpha phase rally that moves up to substantial new highs would reconfirm the current bullish short-term trend and forecast additional gains. Alternatively, an extended alpha phase decline that moves well below the last short-term cycle low (STCL) at 3,009 would signal the likely transition to a bearish 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 lower today, retreating from previous highs of the uptrend from March. Technical indicators are moderately bullish overall, favoring a continuation of the advance.

Cycle Analysis

We are 18 sessions into the alpha phase rally of the cycle following the short-term cycle low (STCL) on June 26. A cycle high setup occurred today, suggesting that the overdue alpha high (AH) may have formed on July 22. A close below 3,224 during the next session would generate a cycle high signal and indicate that the alpha phase decline is likely in progress. An extended alpha phase rally that moves up to substantial new highs would reconfirm the current bullish translation and forecast additional gains. Alternatively, an extended alpha phase decline that moves well below the last STCL at 3,009 would signal the likely transition to a bearish translation. The window during which the next STCL is likely to occur is from August 7 to August 27, with our best estimate being in the August 19 to August 25 range.

  • Last STCL: June 26, 2020
  • Cycle Duration: 18 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: August 7 to August 27; best estimate in the August 19 to August 25 range.
  • Setup Status: Cycle high setup occurred today.
  • Trigger Status: Cycle high trigger is pending from today, requiring a close below 3,224 during the next session to generate a cycle high signal.
  • Signal Status: No active signals.
  • Stop Level: None active.

Short-term Outlook

  • Bullish Scenario: A close above the recent short-term high at 3,276 would reconfirm the uptrend from March and forecast additional gains.
  • Bearish Scenario: A reversal and close well below congestion support in the 3,000 area would confirm the start of a new downtrend and predict additional losses.

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

Category: Forecasts, Short-term Forecasts


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