Stock Market Commentary

We are 3 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

Technical Analysis

The index closed slightly lower 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 3 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: 16 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 3,380 would predict a move down toward the previous short-term low at 3,226.

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