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Stock Market Reconfirms Bearish Translation

|Includes:SPDR S&P 500 Trust ETF (SPY)

The S&P 500 index plunged nearly 2.5 percent today, moving down to a new low for the downtrend from April and breaking slightly below long-term support at the 200-day moving average.

 

 

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With respect to cycle analysis, stocks continue to track the bearish scenario that we have been monitoring since March. On May 30, a cycle high signal was nearly generated, indicating that the alpha high (AH) likely formed on May 29. Today, the sharp decline below the last short-term cycle low (STCL) confirmed that the AH occurred on May 29 and reconfirmed the bearish translation that has persisted since April.

 

 

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From a weekly perspective, the sharp decline this week has caused a change to our preferred intermediate-term scenario and it is now likely that the latest intermediate-term cycle low (ITCL) formed during the week ending April 13. The high that followed in late April was likely a half cycle high (NYSE:HCH), although an uninterrupted decline during the next 2 months would suggest that it was actually an intermediate-term cycle high (ITCH). The magnitude of the initial corrective phase of the new cycle signals a likely transition to left translation.

 

 

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As we often note, charts do not always have an interesting story to tell, but when they do, it is important to pay close attention. The sharp decline today in the S&P 500 index had a meaningful impact on the short-term and intermediate-term outlooks, and market behavior during the next few weeks will likely provide the next important signal with respect to long-term direction. We will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers. Try our service for free.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: SPY