Stock Market Commentary

We are 5 sessions into the beta phase decline of the short-term cycle that began on November 1. The latest short-term low may have formed on December 14, although we would need to see additional strength to confirm that development.

The magnitude and duration of the last beta phase rally signal the likely transition to a bullish short-term trend.

S&P 500 Index Daily Chart Analyses

Technical Analysis

The index closed sharply higher today, approaching previous highs of the uptrend from March. Technical indicators are bullish overall, strongly favoring a continuation of the advance.

Cycle Analysis

We are 5 sessions into the beta phase decline of the cycle following the short-term cycle low (STCL) on November 1. The magnitude and duration of the last beta phase rally signal the likely transition to a bullish translation. The window during which the next STCL is likely to occur is now through December 31, with our best estimate being in the December 17 to December 23 range. The latest STCL may have formed on December 14, although we would need to see additional strength during the next session to confirm that development.

• Last STCL: November 1, 2020
• Cycle Duration: 30 sessions
• Cycle Translation: Bullish
• Next STCL Window: Now through December 31; best estimate in the December 17 to December 23 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 the recent short-term high at 3,706 would reconfirm the uptrend from March and forecast additional gains.
• Bearish Scenario: A reversal and close well below the middle of the Bollinger bands at 3,643 would predict a return to the 50-day moving average at 3,530.

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