The S&P 500 index closed moderately lower today, moving further below support at the lower boundary of the uptrend from 2014. Additionally, a bearish rising wedge formation had been developing since late 2014 and the close well below formation support is a meaningful technical breakdown from a short-term perspective.
With respect to cycle analysis, our computer model correctly identified the formation of the last short-term high at the beta high (NYSE:BH) in May and the beta phase decline has accelerated during the last 3 sessions. However, our current computer model indicates that the latest short-term cycle low (STCL) is imminent, so a reaction could begin at any time during the next few sessions.
Additionally, our intermediate-term computer model indicates that the latest intermediate-term cycle low (ITCL) is imminent and it will likely form sometime during the next three weeks.
It is possible that the latest STCL and ITCL will form at the same time, so we may be on the verge of a meaningful rebound. However, as we discussed this past weekend, the cyclical uptrend from 2009 is exhibiting early signs of weakness. A brief rebound that fails to move up to significant new long-term highs would be the next sign that a cyclical top is in the process of forming. Therefore, it will be important to monitor closely the character of the advance off of the forthcoming ITCL.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.