The S&P 500 has been playing out exactly as forecast in last week’s Sentient Trader Outlook. Price formed a peak of the 40-day cycle at 1229.50 on 31 August, and then turned down towards the 40-day cycle trough.
We are now expecting the 40-day trough, and then a move up which will most likely be brief and disappointing, as shown by the low-hanging red-filled projection box. The underlying trend is fairly strongly down (although neutral considering only the 80-day and 20-week cycles), which is why the move up is likely to disappoint. Price is caught up in an FLD congestion pause zone, and so it might experience a bit of a kick up when it breaks free of that (which is why the upwards projection is fairly wide-ranging), but the underlying trend will soon bring it down again.
It is possible that the 40-day trough was formed yesterday as price dipped into the target zone (in terms of price and time).
The trough will be confirmed when the median price crosses one of the FLD or VTL levels shown on the above median-price chart.
