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.
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.
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.
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.