Let's do a Cyclical Analysis on the S & P500 Index (actually the future miniS & P500) to understand the potential developments for the next few days.
We see the trend of the miniS & P500 starting from the minimum of March 23, with data at 15 minutes updated at 12:00 today 3 April:
The graph was created with the Cycles Navigator software I created.
The green dot line represents future prices on the miniS & P500. The White line represents the potential cyclical trend (valid above all for times and trends and not for forces - or prices). The Yellow line at the bottom is an indicator of Cyclical Strength (I use about 6-7 different ones).
This graph represents the Monthly Cycle (average duration of approximately 1 calendar month) - this cycle started on the lows of March 23 morning and had a good push up to the maximum of March 27 (see green arrow). We know that this recovery phase after the previous collapse is linked to heavy Fed interventions in support of the US economy. For 6 days, the market has been in a congestion phase that could last until about April 10th (see yellow ellipse above). The cycle force indicator at the bottom of the figure confirms this stall phase. Then we may have a phase of gradual weakness, of which it is difficult to estimate the extent currently, to close the cycle by April 23rd. Based on the higher cyclical structures, I do not expect a sharp drop, but only a correction with respect to the rise since 23 March.
However, it must be said that the implied volatility (i.e. the Vix index) remains high, that is, the fear of new falls remains high. This makes any technical tool based on statistical estimates less reliable.
Just to give some price reference (which I call "critical levels" and they are not true target prices) a phase of slight strength could bring back towards 2550-2600 and also test the area of recent highs around 2635. If there was greater strength could even go up to 2700, a level that for now I set as a limit.
On the opposite side, a slight correction could lead to 2450-2400. Values lower than towards 2350 would tell us that this cycle has entered its weak phase and it could reach 2300 to 2250, which for now I set as a limit level.
I remember that although there are cyclical structures within the financial markets these are not and cannot be exactly regular. Therefore the analysis carried out (like all technical analysis) can only be probabilistic, in compliance with a series of rules that the Cyclical Analysis provides.
NOTE - This makes any technical tool based on statistical estimates less reliable.
'The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.'
