Short-term Forecast for February 5, 2021

| February 5, 2021

Stock Market Commentary

We are 5 sessions into the alpha phase rally of the short-term cycle that began on January 29.

An extended alpha phase rally that moves up to new highs would reconfirm the current bullish short-term trend and forecast additional gains. Alternatively, a quick reversal followed by an extended alpha phase decline 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 moderately higher today, moving up to a new high for the uptrend from March. Technical indicators are bullish overall, strongly favoring a continuation of the advance.

Cycle Analysis

We are 5 sessions into the alpha phase rally of the of the cycle following the short-term cycle low (STCL) on January 29. An extended alpha phase rally that moves up to new highs would reconfirm the current bullish translation and forecast additional gains. Alternatively, a quick reversal followed by an extended alpha phase decline would signal the likely transition to a bearish translation. The window during which the next STCL is likely to occur is from March 12 to April 1, with our best estimate being in the March 24 to March 30 range.

  • Last STCL: January 29, 2021
  • Cycle Duration: 5 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: March 12 to April 1; best estimate in the March 24 to March 30 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 current levels would reconfirm the uptrend from March and forecast additional gains.
  • Bearish Scenario: A reversal and close well below the 50-day moving average at 3,741 would confirm the start of a new downtrend and predict additional losses.

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

Category: Forecasts, Short-term Forecasts


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