The S&P 500 index closed sharply lower today, retreating further from recent highs of the cyclical bull market from 2009 and breaking well below support at the lower boundary of the volatile uptrend from June.
With respect to cycle analysis, the sharp decline today confirmed the cycle high setup that occurred yesterday, generating a cycle high signal that indicates the alpha high (AH) likely formed on October 5. The stock market is currently tracking the bearish short-term scenario that we outlined last week. The failure of the alpha phase rally to move up to new short-term highs suggests that the uptrend from June is losing strength.
From an intermediate-term perspective, the closest important support level of the bull market from 2009 is the lower boundary of the power uptrend from 2011 currently near 1,366, so a weekly close well below that level would be the first meaningful long-term breakdown.
At a current duration of 43 months, the bull market is overdue for termination and the next cyclical top could form at any time. Therefore, it will be important to continue monitoring market behavior for signs of a long-term reversal. We will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.