by Erik McCurdy
The S&P 500 index closed sharply lower this week, moving down to a new low for the downtrend from early May. There are two viable scenarios with respect to the development of the current intermediate-term cycle following the last Intermediate-Term Cycle Low (ITCL) in March. A return to the April long-term high of the cyclical bull market during the next few weeks would reconfirm the Half Cycle High (HCH) in early May and favor the development of a sideways consolidation formation heading into the next ITCL in August or early September.
Alternatively, a continuation of the downtrend from May and move below the last ITCL would signal that the May high was actually an Intermediate-Term Cycle High (ITCH), confirm a transition to left translation and forecast additional losses heading into the next ITCL.
Market behavior during early June will signal which scenario has become more likely. A rebound during the next two weeks would favor the bullish possibility, while a move well below strong congestion support in the 1,300 area would shift the odds strongly in favor of the bearish scenario.
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Erik McCurdy is the senior market technician for Prometheus Market Insight and has been analyzing charts every day for over 15 years. The software program that he developed to monitor long-term stock market trends has correctly predicted over 90% of the long-term turning points in the S&P 500 index since 1940. His Gold Currency Index has predicted every major trend change in the US gold market since its creation in 2005. The Prometheus Market Insight newsletter service provides daily, weekly and monthly forecasts for stocks, bonds, currencies, commodities and precious metals using proven computer models that base their predictions on technical and cycle analysis. Stay in touch: Email: [email protected]