Another Bounce is Due but Bulls are Weakening

Short-term:

Last week, Bulls tried to break out of the 2 week range, only to fail once again near the top.  Some of our bounce models have now triggered, so we expect the Bulls to make another move early this week. If the Bulls fail to break above 267 within the next week or two, the Bears will likely break below 258 with a 250 target.

Statistics for 1 down week on the S&P: next week historically, has a 59% chance to close in the green, with a decent profit factor.

Medium-Term:

We are in the final phase of the long 8-year bull market and we just saw/are currently in the exhaustion phase of the Bull move. Since we saw the abrupt pullback that we expected, Bulls will now use their get-out-of-jail-free card (from the long-term update). We are also currently seeing the trading range we spoke about which could still last another few months and still grow in size. If the Bulls do not make a strong push higher soon, chances will increase that the February low will not hold with a 240 – 250 target. Bulls will then eventually likely try, at the least, to retest the January high.

The period above the moving average came to an end at 64 weeks. This was the longest period above the average in the history of the S&P! So we clearly saw a historic bull move. Markets have inertia and this is why we believe Bulls are still safe and will likely (at the very least) make a clear lower higher over the next few months. So for now, the chance of this turning straight into a bear market are less than 25%.

Long-Term:

Long-Term Market Outlook (Updated 11/5/17).

The Calendar:

This week:

Next week:

Trend Following Models:

Our long-term models are Bullish.
Our medium-term models are Bearish.
Our short-term models are Neutral.

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