Home > News > 03/11/2018 – Market Update

03/11/2018 – Market Update

 

Stock Market Uptrend Resuming

 

The S&P 500 index had a powerful upward breakout from its 6-week symmetrical triangle pattern last Friday as a suggestion that the current intermediate-term correction has ended and the uptrend is resuming. The Semiconductors, Technology, and Internet were leading sectors of the rally last week. Both the US dollar and gold are in their short-term horizontal trading ranges waiting for next breakouts while the 30-Year US treasury bond stays in its bearish downtrend channel. The broad stock market is projected to be in a short-term neutral time-window until 3/26/2018.

 
Table of Contents


 

 

 
Broad Market to be in Short-Term Neutral Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 7 on Friday 3/9/2018 (down from 47 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is above the 89-day exponential moving average, and the momentum is positive. Based on the forecast of LWX, the broad stock market is projected to be in a short-term neutral time-window until 3/26/2018. (see the second table below).

 

The LWX Indicator in Last Four Weeks (Actual)

 

The LWX Indicator in Next Four Weeks (Forecast)

 

The daily chart below has the Wilshire 5000 index with both the BIX and the Momentum indicators. The current market status is summarized as follows:

Short-Term Cycle: upward
Date of Next Cycle High: 3/26/2018
Broad Market Instability Index (BIX): 7, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 


 
Sector Performance Ranking with Semiconductors Sector Leading


 

The following table is the percentage change of sectors and major market indexes against the 89-day exponential moving average (EMA89). The Wilshire 5000 index, as an average or a benchmark of the total market, is 3.66% above the EMA89. Outperforming sectors are Semiconductors (10.30%), Technology (8.86%), and Internet (7.15%). Underperforming sectors are Precious Metals (-6.84%), Utilities (-4.22%), and Real Estate (-2.69%).
 

 

 
S&P 500 Index in Primary Upward Wave 5


 

The SPX is in primer impulse wave [5] which is the last upward wave of a multi-year primer [1][2][3][4][5] five-wave sequence started from 2009. The current primer upward wave [5] is in progress to develop an intermediate (1)(2)(3)(4)(5) five-wave sequence.

Now it is in intermediate wave (4). The weekly chart below shows that a long-term picture of the SPX is still in a 27-month bullish uptrend channel.

 

After intermediate upward wave (3) ended in late January, intermediate corrective wave (4) has been developed with a, b and c sub-waves. Early last week sub-wave c ended. Now the SPX should be in the beginning of intermediate upward wave (5).

In the following daily chart of the SPX, the middle-term correction with a sub-wave abc sequence formed a 6-week symmetrical triangle pattern that psychological energy coils up like a spring to set up for next breakout. Both trendlines act as barriers that prevent the price from heading higher or lower, but once the price breaches one of these levels, a sharp movement often follows. Last Friday, the price powerfully broke above the upper boundary of the triangle. Based on this bullish breakout, the upside price target is projected at 2945.

 


 
German DAX Index: Elliott Wave


 

In the following weekly chart, the German DAX index is in primer impulse wave [5] of a multi-year primer [1][2][3][4][5] five-wave sequence. Upward primer wave [5] is in progress to develop an intermediate (1)(2)(3)(4)(5) five-wave sequence. Currently intermediate corrective wave (4) is ending.

 


 
India Bombay Index Broke below 6-Month Ascending Broadening Wedge Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 6-month ascending broadening wedge pattern. The broadening aspect of this pattern suggests increasing price volatility. Last week the price was unable to hold above the lower boundary of the wedge, and broke below the lower boundary. Based on this bearish breakout, the downside price target is projected at 31250.

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index is forming a 1.5-year ascending broadening right-angle pattern. The broadening aspect of this pattern suggests increasing price volatility with uncertain price movement.

 


 
US Treasury Bond in 3-Month Bearish Downtrend Channel


 

The 30-year U.S. treasury bond index is forming a 3-month bearish downtrend channel pattern. It is bearish as long as the price stays below the upper boundary of the channel.

 


 
US Dollar Forming 2-Month Horizontal Trading Range


 

The U.S. dollar index is forming a 2-month horizontal trading range between 88.5 and 90.5. It is also forming a potential bullish double bottom pattern. It is neutral before the price breaches one of the boundaries of the trading range.

 


 
Gold Forming 2-month Horizontal Trading Range


 

The gold index is forming a 2-month horizontal trading range between 1315 and 1365. It is also forming a potential bearish double top pattern. It is neutral before the price breaches one of the boundaries of the trading range.

 

 
Silver Forming 8-Month Symmetrical Triangle Pattern


 

The silver index is forming an 8-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.

 

 
Crude Oil Forming 6-Week Symmetrical Triangle pattern


 

The crude oil index is forming a 6-week symmetrical triangle pattern. Both trendlines act as barriers that prevent the price from heading higher or lower, but once the price breaches one of these levels, a sharp movement often follows.

 


 
Asset Class Performance Ranking with Equity Leading


 

The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently equity is outperforming and the US treasury bond is underperforming.
 
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