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Martin Armstrong: S&P 500 Index Cash

* October 22, 2016

Analysis for the Week of October 24, 2016

We should see a trend change come this month in S&P 500 Cash Index so pay attention to events ahead. Last month produced a low at 211912 and so far we are trading neutral within last month's trading range of 218787 to 211912. We need to breakout of this range to confirm the direction. Therefore, a close above will be bullish and a close below will warn of a possible decline. As of the close of Fri. Oct. 21, 2016, the market is immediately in a neutral position for right now with still an underlying bearish tone. S&P 500 Cash Index closed today at 214116 and is trading up about 4.75% for the year from last year's closing of 204394. So far, we have been trading up for the past 6 days since the low made on Thu. Oct. 13, 2016.

On the weekly level, the last important high was established the week of August 15th at 219381, which was up 27 weeks from the low made back during the week of February 8th. We have been generally trading up for the past week from the low of the week of October 10th, which has been a move of 1.55% percent.

Critical support still underlies this market at 203968 and a break of that level on a monthly closing basis would warn of a decline ahead becomes possible. Logically, my long-term view expectation recognizes that the current directional movement since the low made back in February 2016 has been an extended Bullish trend in S&P 500 Cash Index which remains in motion as long as we hold above 203967 on a monthly closing basis. It is incredibly important to identify the broader trend for that is the underlying tone. It is wise to take position counter-trend only with this understanding of what you are doing.

Caution is advisable since this is also 34 years up from the low of given that was the major low 1982. We must pay attention to the closing for this year. If we close lower at year end, beneath 204394, then we can see a pause in the uptrend into next year. Penetrating intraday last year's low of 186701 will confirm a serious correction into next year. However, we have rallied to exceed last year's high last month. We need to see a closing above 213472 at year-end to see a continued rally is possible into next year. Exceeding this year's high next year and holding last year's low intraday will signal the bullish trend is still intact. A breach of last year's low of 186701 intraday will negate that outcome.

Eyeballing the longer term yearly level, we see turning points where highs or lows on an intraday or closing basis should form will be, 2018, 2020, 2022 and 2024. Centering on the patterns unfolding, we do see a prospect of a decline moving into 2018 with the opposite trend thereafter into 2020. This pattern becomes a possibility if last year's low of 186701 is penetrated even intraday. Nevertheless, the most critical model, the Directional Change Model targets are during 2023 and during 2024. This model often picks the high or low, but can also elect a breakout to a new higher trading zone or a breakdown to a new lower trading level. Bearing in mind the volatility models suggest we should see a rise in price movement during January 2018. We look to the turning points to ascertain the direction. Volatility targets reflect only volatility. Nonetheless, our Panic Cycle target, for the next period to watchis during 2015. Keep in mind that a Panic Cycle differs from just volatility. This can be either an outside reversal or a sharp move in only one direction. Panic Cycles can be either up or down. Watch the oscillators and the reversals to determine the best indication of the potential direction.

Inspecting the immediate momentum is Bearish on the weekly level yet we did penetrate the week of October 10th's low. Some caution is warranted given the fact that last month closed lower. So far, this is an outside reversal to the upside, which is a significant move. . On the weekly level, last month was an outside reversal to the upside which is implying we have a bullish bias currently.

While the market made a new low last month, our energy models turned up. This warns we may be preparing to rally. At this moment, this market is in a downward trend on all our indicators looking at the weekly level. On the subject of the direction of this trend, we have been moving down for the past 9 weeks. The last high on the weekly level was 219381, which was created during the week of August 15th. The last weekly level low was 199168, which formed during the week of June 27th. However, we still remain below key support and key resistance now stands at 215901 above the market. On a broader perspective, this market remains in an uptrend posture on all our indicators looking at the monthly level. We see here the trend has been moving up for the past 7 months. The last monthly level low was 181010, which formed during February. The last high on the monthly level was 219381, which was created during August.

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