Intermediate-term Forecast for December 26, 2020

| December 26, 2020

Stock Market Commentary

We are 8 weeks into the rally phase of the intermediate-term cycle that began during the week ending November 6.

An extended rally phase that moves up to meaningful new highs would reconfirm the current bullish intermediate-term trend and forecast additional gains. Alternatively, a quick reversal followed by an extended decline phase that moves well below the last intermediate-term low at 3,234 would signal the likely transition to a bearish intermediate-term trend.

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 slightly lower this week, holding near recent highs of the uptrend from March. Technical indicators are bullish overall, strongly favoring a continuation of the advance.

Cycle Analysis

We are 8 weeks into the rally phase of the cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending November 6. An extended rally phase that moves up to meaningful new highs would reconfirm the current bullish translation and forecast additional gains. Alternatively, a quick reversal followed by an extended decline phase that moves well below the last ITCL at 3,234 would signal the likely transition to a bearish translation. The window during which the next ITCL is likely to occur is from February 19 to April 23, with our best estimate being in the March 19 to April 16 range.

  • Last ITCL: November 6, 2020
  • Cycle Duration: 8 weeks
  • Cycle Translation: Bullish
  • Next ITCL Window: February 19 to April 23; best estimate in the March 19 to April 16 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 well above the recent high at 3,703 would reconfirm the uptrend from March and forecast additional gains.
  • Bearish Scenario: A reversal and weekly close well below the middle of the Bollinger bands at 3,489 would predict a return to the 50-week moving average at 3,210.

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

Category: Forecasts, Intermediate-term Forecasts


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