Short-term Forecast for October 16, 2020

| October 16, 2020

Stock Market Commentary

We are 4 sessions into the alpha phase decline of the short-term cycle that began on September 24.

The magnitude and duration of the last alpha phase rally suggest that short-term direction is in question. An extended alpha phase decline that moves below the last short-term low at 3,226 would reconfirm that current bearish short-term trend and forecast additional losses. Alternatively, a quick rebound followed by an extended beta phase rally 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 near unchanged today, holding below previous highs of the uptrend from March. Technical indicators are moderately bullish overall, favoring a continuation of the advance.

Cycle Analysis

We are 4 sessions into the alpha phase decline of the cycle following the short-term cycle low (STCL) on September 24. The magnitude and duration of the last alpha phase rally suggest that short-term direction is in question. An extended alpha phase decline that moves below the last STCL at 3,226 would reconfirm that current bearish translation and forecast additional losses. Alternatively, a quick rebound followed by an extended beta phase rally would signal the likely transition to a bullish translation. The window during which the next STCL is likely to occur is from November 3 to November 23, with our best estimate being in the November 12 to November 18 range.

  • Last STCL: September 24, 2020
  • Cycle Duration: 17 sessions
  • Cycle Translation: Bearish
  • Next STCL Window: November 3 to November 23; best estimate in the November 12 to November 18 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 above the recent short-term high at 3,534 would predict a return to the previous short-term high at 3,581.
  • Bearish Scenario: A close well below the middle of the Bollinger bands at 3,389 would predict a move down toward the previous short-term low at 3,226.

The bullish scenario is more likely (~70 probable).

Category: Forecasts, Short-term Forecasts


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