Home > News > 04/22/2018 – Market Update

04/22/2018 – Market Update

 

Weakening Stocks and Bearish Bonds

 

The S&P 500 index made another lower high last week after it retreated from the upper resistance of its 3-month downtrend line. A short-term descending triangle pattern on the SPX suggests that the price possibly move lower to retest the lower horizontal boundary of the triangle pattern. The Shanghai Stock Exchange Composite index is at the edge of a breaking down as the price is retesting its mid-term support level near 3100. The 30-Year US treasury bond broke below its 2-month uptrend line and it likely is a set up of a bearish measure move down pattern to have the second down leg. 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 neutral time-window until 4/25/2018 followed by a bearish time-window right after.

 
Table of Contents


 

 

 
Broad Market in Short-Term Neutral Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 15 on Friday 4/20/2018 (up from 14 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is at the 89-day exponential moving average, and the momentum is slightly negative. Based on the forecast of LWX, the broad stock market is projected to be in a short-term neutral time-window until 4/25/2018, followed by a bearish time-window right after (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: downward
Date of Next Cycle Low: 5/10/2018
Broad Market Instability Index (BIX): 15, below the panic threshold (bullish)
Momentum Indicator: slightly negative (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 0.01% at the EMA89. Outperforming sectors are Energy (5.88%), Oil Equipment (3.45%), and Precious Metals (1.70%). Underperforming sectors are Consumer Goods (-5.84%), Biotech (-5.53%), and Home Construction (-5.53%).
 

 

 
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 abc sequence. The weekly chart below shows that a long-term picture of the SPX formed a 27-month bullish uptrend channel. The price is holding above the trendline.

 

Intermediate corrective wave (4) is in a sub-wave abc sequence. In the following daily chart of the SPX, the middle-term correction is forming a 3-month descending triangle pattern. Last week the price retreated from the upper boundary of the triangle, and is likely to move down towards the lower 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. Now the price is testing the horizontal boundary. If it breaks below, the downside price target would be projected at 2920.

 


 
US Treasury Bond Broke below 2-Month Uptrend Channel


 

The 30-year U.S. treasury bond index formed a 2-month uptrend channel. Last week the price broke below the lower boundary of the channel. This is bearish and it is a set up for measure move down to have the second down leg.

 


 
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. The price has broken 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 the US treasury bond is underperforming.
 
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