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04/29/2018 – Market Update

April 30, 2018 Leave a comment

 

US Dollar Bottoming Out

 

The US dollar became bullish after its price broke above a 3-month horizontal trading range last week. This is a sign of bottoming out on the US dollar. Gold is still in its mid-term horizontal trading range waiting for a breakout. The 30-Year US treasury bond has been bearish with volatile price movement. The price of the S&P 500 index is confined in a 3-month descending triangle pattern as the range of the confinement is getting narrow and narrow. The broad stock market is projected to be in a short-term bearish time-window until 5/9/2018.

 
Table of Contents

 

 

 
Broad Market in Short-Term Bearish Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 40 on Friday 4/27/2018 (up from 15 the previous week) which is right below the panic threshold level of 42 and indicates a neutral market. The Wilshire 5000 index is at 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 bearish time-window until 5/9/2018 (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: downward
Date of Next Cycle Low: 5/9/2018
Broad Market Instability Index (BIX): 40, right below the panic threshold (neutral)
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 -0.08% at the EMA89. Outperforming sectors are Energy (5.75%), Oil Equipment (3.59%), and Utilities (2.26%). Underperforming sectors are Consumer Goods (-4.92%), Biotech (-2.81%), and Industrials (-2.23%).
 

 

 
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. The price is holding right above the trendline.

 

Intermediate corrective wave (4) is in a sub-wave a–b–c sequence. In the following daily chart of the SPX, the middle-term correction is forming a 3-month descending triangle pattern. The range confining the price is getting narrow and narrow that would make the price easy to break out either way.

 


 
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 Forming 5-Month Descending Broadening Wedge

 

The 30-year U.S. treasury bond index is forming a 5-month descending broadening wedge pattern. It suggests a bearish status with a volatile price movement.

 


 
US Dollar Broke above 3-Month Horizontal Trading Range

 

The U.S. dollar index formed a 3-month horizontal trading range between 88.5 and 90.5.
Last week the price broke above the upper boundary of the range. This breakout is very bullish for the US dollar. The short-term upside price target is projected at 92.25.

 


 
Gold Forming 4-month Horizontal Trading Range

 

The gold index is forming a 4-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 10-Month Symmetrical Triangle Pattern

 

The silver index is forming a 10-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.

 

 
Crude Oil Bullish 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 as long as the price stays above the horizontal line of the triangle.

 


 
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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