June 2024 Cycle Forecasts
Today we’ll go over market conditions and then provide our June 2024 Cycle Forecasts for the 12 main assets we cover (S&P 500, Nasdaq 100, Russell 2000, the VIX, 10-year Treasury Rate, Investment Grade Bonds, High Yield Bonds, US Dollar, Crude Oil, Gold, Silver, and Bitcoin).
Market Conditions
We have been warning subscribers that June will be more choppy and volatile than May. It seems like that volatility came a tad bit early.
On Thursday the S&P 500 (SPY) closed below the 21 EMA. This was uncharacteristic because before a change of trend there are usually 4 to 6 Distribution Days in 4 to 5 weeks. On Friday, despite a positive inflation report (Core PCE), the market continued it’s selloff. However around midday the market found buyers as the market stopped it’s decline near the R1 Pivot Point which acted as support ( refer to chart below). What followed was an impressive reversal rally where the SPY erased it’s loss for the day and added 0.91%, while closing above the 9 and 21 Exponential Moving Averages (EMA). The uptrend was saved for now.
Looking at the chart above, liquidity (black line) appears to have flooded the market causing the bullish reversal. Notice that the reversal occurred on strong volume and coincided with a bounce in the McClellan Oscillator, the Percent of Nasdaq Stocks Above the 5 SMA (NCFD) and the S&P 500 Stocks Above the 50 SMA (S5TW). In other words, this was a high breadth reversal. More positive signs: 1) the VIX dropped, 2) there were Net New Highs once again and 3) the Advance/Decline Volume Line (ADV) spiked.
Let’s take a closer look at the technicals in the chart below. The larger cycle bracket below is 54 trading days and we are not yet at the last 20% of the cycle bracket, which is where selloffs often occur. So this uptrend could still have time, but may find some selling around June 15th to 21st. We also used a 27-day SMA, which is half of the 54-day Daily Cycle. Notice that Friday’s drop kissed the 27 SMA before reversing. SPY is still above the Ichimoku Cloud, telling us that this uptrend will have support. The Stochastics touched oversold levels and bounced. RSI held the 50 mark, telling us the uptrend still has strength. The MACD held above the 0 mark also telling us that momentum is still on the bullish side.
Looking at the SPY on the 2-Hour chart is quite interesting. On the bullish side, Friday’s powerful reversal was able to break the downtrend line and Anchored Volume Weighted Average Price (orange line) from the start of the selloff, while getting the RSI above the 50 mark (shows strength). The reversal started when the SPY hit the S2 Pivot Point and RSI was oversold. Similarly the decline occurred when the SPY hit the R2 Pivot Point and RSI was overbought. This seems like a very technical pullback that reset the SPY for another up-move. On the bearish side, we still have not broken above the 50 SMA yet. We could be at a similar place as early April, where there was a short squeeze rally that could not break above the 50 SMA, resulting in more downside. The bottom line is that the SPY has to show us that it can get above the 50 SMA on the 2-hour chart and then make new highs for this rally to continue in a healthy form.
Conclusion: Buyers have to continue supporting the stock market for it to continue above the 50 SMA on the 2-hour chart and to reach new highs. It could be a bumpy ride, but the currents are on the side of the bulls in early June before corporate stock buyback blackouts begin on June 15th. Meanwhile, we’ll keep an eye out for more Distribution Days. In our Premium Section we’ll now provide June Cycle Forecasts for our 12 main asset classes. Finally, consider becoming a Founding Member to get Annual Cycle Forecasts to the end of 2024 emailed to you.
Disclaimer - All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.