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04/15/2018 – Market Update

April 16, 2018 Leave a comment Go to comments

 

Upward Stock Market with Weak Momentum

 

The S&P 500 index bounced back last week after defended the key level of 2580. The price movement is confined in a 2.5-month descending triangle pattern between a negative slope line of lower highs and a horizontal support line. The current upward move will be soon to face a resistance at the upper boundary of triangle. The 30-Year US treasury bond is in a 2-month uptrend channel. The US dollar and gold are still in their short-term horizontal trading ranges waiting for breakouts. The broad stock market is projected to be in a short-term bullish time-window until 4/20/2018.

 
Table of Contents

 

 

 
Broad Market in Short-Term Bullish Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 14 on Friday 4/13/2018 (down from 29 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is below the 89-day exponential moving average, and the momentum is slightly positive. Based on the forecast of LWX, the broad stock market is projected to be in a short-term bullish time-window until 4/20/2018 (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: 4/20/2018
Broad Market Instability Index (BIX): 14, below the panic threshold (bullish)
Momentum Indicator: slightly positive (neutral)

 


 
Sector Performance Ranking with Energy 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 0.69% below the EMA89. Outperforming sectors are Energy (3.73%), Semiconductors (2.04%), and Precious Metals (1.86%). Underperforming sectors are Biotech (-5.48%), Home Construction (-3.50%), and Internet (-3.29%).
 

 

 
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 corrective wave (4) with a sub-wave a–b–c sequence. The weekly chart below shows that a long-term picture of the SPX formed a 27-month bullish uptrend channel. Last four weeks the price tested the lower boundary of the channel, and still hold above the trendline.

 

Intermediate corrective wave (4) is in a sub-wave a–b–c sequence. Now downward sub-wave c is ending. In the following daily chart of the SPX, the middle-term correction is forming a 2.5-month descending triangle pattern. The price has bounced off the horizontal boundary of the triangle, and intends to move up towards the upper boundary of the triangle.

 


 
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 it is in the late part of intermediate corrective wave (4).

 


 
India Bombay Index Broke above 2.5-Month Falling Wedge Pattern

 

The India Bombay Stock Exchange 30 Sensex index formed a 2.5 month falling wedge pattern. After the price broke above the upper boundary of the wedge, it has had a sharp advance. Based on this bullish breakout, the upside price target is projected at 35600.

 


 
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. The horizontal boundary of the triangle is a major support line to hold the price.

 


 
US Treasury Bond Forming 2-Month Uptrend Channel

 

The 30-year U.S. treasury bond index is forming a 2-month uptrend channel. It is bullish as long as the price stays above the lower boundary of the channel.

 


 
US Dollar Forming 3-Month Horizontal Trading Range

 

The U.S. dollar index is forming a 3-month horizontal trading range between 88.5 and 90.5. It is neutral before the price breaches one of the boundaries of the trading range.

 


 
Gold Forming 3.5-month Horizontal Trading Range

 

The gold index is forming a 3.5-month horizontal trading range between 1315 and 1365. It is neutral before the price breaches one of the boundaries of the trading range.

 

 
Silver Forming 9-Month Symmetrical Triangle Pattern

 

The silver index is forming an 9-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.

 

 
Crude Oil Broke above 2.5-Month Ascending Triangle pattern

 

The crude oil index formed a 2.5-month ascending triangle pattern. Last week the price bounced off the lower boundary of the triangle, and broke above the upper horizontal boundary. Based this bullish breakout, the upside price target is projected at 72.

 


 
Asset Class Performance Ranking with Crude Oil Leading

 

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