Short-Term Forecast For Monday, Oct. 26

Stock Market Commentary

The sharp decline today indicates that the beta phase decline of the current short-term cycle is likely in progress. We are 1 session into the beta phase decline of the cycle that began on September 24.

S&P 500 Index Daily Chart AnalysesThe magnitude and duration of the last alpha phase rally suggest that short-term direction is in question. An extended beta 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 alpha phase rally would signal the likely transition to a bullish short-term trend.

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 further from previous highs of the uptrend from March. Technical indicators are effectively neutral overall, suggesting that direction is in question.

The sharp decline today indicates that the beta phase decline is likely in progress. We are 1 session into the beta 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 beta 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 alpha 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 9 to November 13 range.

Cycle Analysis

• Last STCL: September 24, 2020
• Cycle Duration: 22 sessions
• Cycle Translation: Bearish
• Next STCL Window: November 3 to November 23; best estimate in the November 9 to November 13 range.

• Setup Status: No active setups.
• Trigger Status: No pending triggers.
• Signal Status: No active signals.
• Stop Level: None active.

Bullish Scenario: A rebound and close above the recent short-term high at 3,534 would predict a return to the previous short-term high at 3,581.Short-term Outlook

• Bearish Scenario: A close below current levels would predict a move down toward the previous short-term low at 3,226.

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