S&P500 Market Breadth Driven Short Term Forecast Starting Jul 18, 2016

By Lawrence

Review of Forecast for Jul 11, 2016

First half of the week the 1.5% upside cap looked working but then last 2 days of the option expiration week cleared the resistance. No down move at all so downside expansion did not happen. The breadth analog model did a poor job last week.

Forecast Starting Jul 18, 2016

Summary of the S&P500 short-term forecast based on my proprietary market breadth analog model as of the close of Jul 15, 2016:
  • Volatility short term cycle low likely in place
  • Limited up side with 1.5% cap
  • 1% down move will likely give us 2% down
  • Breadth divergence sell setups in the making on multiple custom breadth indicators but not confirmed yet, need intraday confirmation

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Short Explanation About The Model

My market breadth based analog model takes into account the short term volatility, daily market breadth readings and a few other intraday breadth data to identify the current market conditions. Using the information, the model then went through the historical data over the past 20 years to generate its statistical analysis. The model has been pretty good at identifying important swing tops and bottoms over the past few years by providing early warnings about potential volatility upticks.

For the technical explanation of the concept, you can read about it here, Market Breadth Primer: Market Breadth Analog Forecasting Method

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