Archive

Archive for May 14, 2018

05/13/2018 – Market Update

May 14, 2018 Leave a comment

 

Intermediate Upward Wave of Stocks Starting

 

The stock market strengthened as the S&P 500 index broke above the upper boundary of its 3-month descending triangle pattern last week. Our Elliott Wave analysis suggests that the SPX is starting upward intermediate wave 5, and the upside price target is projected at 2930. The US dollar is in a short-term consolidation after reached our upside price target 92.25. Gold is still in its mid-term horizontal trading range waiting for a breakout. The broad stock market is projected to be in a short-term bullish time-window until 5/24/2018.

 
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 23 on Friday 5/11/2018 (down from 46 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 bullish time-window until 5/24/2018 (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: 5/24/2018
Broad Market Instability Index (BIX): 23, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 


 
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 2.1% above the EMA89. Outperforming sectors are Energy (8.29%), Technology (5.90%), and Oil Equipment (5.66%). Underperforming sectors are Telecommunication (-4.78%), Consumer Goods (-4.74%), and Health Care (-4.74%).
 

 

 
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.

Intermediate corrective wave (4) with a sub-wave abc sequence has ended. Now Intermediate upward wave (5) just started with upward sub-wave 1. The weekly chart below shows that a long-term picture of the SPX stays in a 27-month bullish uptrend channel.

 

In the following daily chart of the SPX, the middle-term correction formed a 3-month descending triangle pattern. The price broke above the upper boundary of the triangle. Based on this bullish breakout, the upside price target is projected at 2930.

 


 
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 beginning of intermediate upward wave (5) with upward sub-wave 1.

 


 
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. Last week the price bounced off the horizontal boundary.

 


 
US Treasury Bond Forming 3.5-Month Broadening Triangle Pattern


 

The 30-year U.S. treasury bond index is forming a 3.5-month broadening triangle pattern. This pattern suggests a short-term bottom process but a volatile price movement.

 


 
US Dollar in Consolidation


 

The U.S. dollar index has reached our short-term upside price target of 92.25 after the price broke above its 3-month trading range. Now it is in a short-term consolidation.

 


 
Gold Forming 4.5-month Horizontal Trading Range


 

The gold index is forming a 4.5-month horizontal trading range between 1305 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 on 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.