Short-Term Forecast For Monday, Sept. 28

Stock Market Commentary

A cycle low signal was generated today, indicating that a new short-term cycle began on September 24. We are 3 sessions into the alpha phase rally of the cycle that began on September 24.

A quick reversal followed by an extended alpha phase decline that moves down to new lows would reconfirm the current bearish short-term trend and forecast additional losses. Alternatively, an extended alpha phase rally that moves well above the last beta high (BH) at 3,411 would suggest that short-term direction is in question.

S&P 500 Index Daily Chart Analyses

Technical Analysis

The index closed sharply higher today, reacting further off of recent lows of the downtrend from early September. Technical indicators are neutral to slightly bearish overall, suggesting that direction is in question with a slight downward bias.

A cycle low signal was generated today, indicating that the latest short-term cycle low (STCL) likely formed on September 24. We are 3 sessions into the alpha phase rally of the cycle following the STCL on September 24. A quick reversal followed by an extended alpha phase decline that moves down to new lows would reconfirm the current bearish translation and forecast additional losses. Alternatively, an extended alpha phase rally that moves well above the last beta high (BH) at 3,411 would suggest that cycle translation is in question. 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 13 to November 19 range.Cycle Analysis

• Last STCL: September 24, 2020
• Cycle Duration: 3 sessions
• Cycle Translation: Bearish
• Next STCL Window: November 3 to November 23; best estimate in the November 13 to November 19 range.

• Setup Status: Cycle low setup occurred today.
• Trigger Status: Cycle low trigger occurred today.
• Signal Status: Cycle low signal was generated today.
• Stop Level: None active.

Bullish Scenario: A close well above the middle of the Bollinger bands at 3,374 would predict a move up toward the previous short-term high at 3,581.Short-term Outlook

• Bearish Scenario: A reversal and close below the previous short-term low at 3,226 would reconfirm the downtrend from early September and forecast additional losses.

Both scenarios are equally likely.