05/27/2018 – Market Update
Stocks were Trading Flat
The stock market has been flat for three weeks and the momentum has weakened. The S&P 500 index is at the early stage of its intermediate upward wave but a short-term consolidation is expected. While the US dollar advanced further, the 30-year U.S. treasury bond and gold rebounded last week after hit fresh 2018 lows. The broad stock market is projected to be in a short-term bearish time-window until 6/13/2018.
Table of Contents
- Broad Market in Short-Term Bearish Time-Window
- Sector Performance Ranking with Semiconductors Sector Leading
- S&P 500 Index in Primary Upward Wave 5
- German DAX Index: Elliott Wave
- India Bombay Index in Consolidation
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Forming 4-Month Broadening Triangle Pattern
- Bullish US Dollar
- Gold Forming 5-month Broadening Right Triangle Pattern
- Silver Forming 11-Month Symmetrical Triangle Pattern
- Crude Oil in Consolidation
- Asset Class Performance Ranking with Crude Oil Leading
Broad Market is about to be in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 14 on Friday 5/25/2018 (down from 18 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 slightly positive. Based on the forecast of LWX, the broad stock market is projected to be in a short-term bearish time-window until 6/13/2018 (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: 6/13/2018
Broad Market Instability Index (BIX): 14, below the panic threshold (bullish)
Momentum Indicator: slightly positive (neutral)
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 1.61% above the EMA89. Outperforming sectors are Semiconductors (6.45%), Technology (4.63%), and Energy (3.28%). Underperforming sectors are Home Construction (-3.59%), Telecommunication (-3.59%), and Consumer Goods (-3.02%).
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 a–b–c 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 28-month bullish uptrend channel.
Intermediate corrective wave (4) with a sub-wave a–b–c 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 28-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 has recently broken above the upper boundary of the triangle. Based on this bullish breakout, the upside price target is projected at 2930, as long as the price stays above 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 beginning of intermediate upward wave (5) with upward sub-wave 1.
India Bombay Index in Consolidation
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, and has reached our price target 35600. Now a consolidation is in progress.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 21-month 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 4-Month Broadening Triangle Pattern
The 30-year U.S. treasury bond index is forming a 4-month broadening triangle pattern. The broadening aspect of this pattern suggests increasing price volatility with uncertain price movement.
The U.S. dollar index extended its advance, and made a very nice left-right symmetrical pattern. The price has reached the high of last December. A consolidation is expected next.
Gold Forming 5-month Broadening Right Triangle Pattern
The gold index is forming a 5-month broadening right triangle pattern. The broadening aspect of this pattern suggests increasing price volatility with uncertain price movement.
Silver Forming 11-Month Symmetrical Triangle Pattern
The silver index is forming a 11-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.
Crude Oil in Consolidation
The crude oil index pulled back sharply last week after the price reached the upside price target 72. Now the price is in a consolidation.
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 gold is underperforming.
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