06/03/2018 – Market Update
Mixed Stock Market Action
The general stock market was choppy last week. Although the blue chip stocks were weak, the small-cap and technology stocks were strong, especially semiconductor and internet sectors outperformed the market. The S&P 500 index is still at the early stage of its intermediate upward wave after its 3-month correction. Crude oil prices pulled back sharply but still in a 2-year bullish uptrend channel. The broad stock market is projected to be in a short-term bearish time-window until 6/12/2018.
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 Forming 2-month Ascending Broadening Wedge Pattern
- 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 1-Year Bullish Uptrend Channel
- Asset Class Performance Ranking with US Dollar Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 20 on Friday 6/1/2018 (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 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 bearish time-window until 6/12/2018 (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: 6/12/2018
Broad Market Instability Index (BIX): 20, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)
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 2.06% above the EMA89. Outperforming sectors are Semiconductors (7.72%), Internet (7.20%), and Technology (6.39%). Underperforming sectors are Home Construction (-4.71%), Telecommunication (-3.95%), and Consumer Goods (-2.75%).
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 Forming 2-month Ascending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 2-month ascending broadening wedge. The broadening aspect of this pattern suggests increasing price volatility with uncertain price movement.
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 1-Year Bullish Uptrend Channel
The crude oil index is forming a 1-year uptrend channel on its weekly chart. It is bullish as long as the price stays above the lower boundary of the channel.
Asset Class Performance Ranking with US Dollar Leading
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently the US dollar is outperforming and gold is underperforming.
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