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06/10/2018 – Market Update

June 10, 2018 Leave a comment

 

Strong Stocks Ahead of Fed Meeting

 

The stock market advanced higher last week ahead of the Fed meeting. The S&P 500 index had a bullish breakout from its 3-week sideways trading, while the Russell 2000 and Nasdaq 100 made new highs. The general stock market maintains a 2.5-year bullish uptrend channel, and now is in the early part of a new intermediate upward wave. The broad stock market is projected to be in a short-term bullish time-window until 6/20/2018.

 
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 13 on Friday 6/8/2018 (down from 20 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 6/20/2018 (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: 6/20/2018
Broad Market Instability Index (BIX): 13, 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 3.45% above the EMA89. Outperforming sectors are Semiconductors (6.55%), Technology (6.02%), and Internet (5.81%). Underperforming sectors are Utility (-3.26%), Telecommunication (-0.43%), and Precious Metals (-0.38%).
 

 

 
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 29-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 2.5-month Ascending Broadening Wedge Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 2.5-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 22-month ascending broadening right-angle pattern. The broadening aspect of this pattern suggests increasing price volatility with uncertain price movement. The horizontal boundary at 3050 is a major support line to hold the price. If the price breaks below this support level, the downside price target would be projected at 2770.

 


 
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.

 


 
US Dollar in Consolidation


 

The U.S. dollar index is in a consolidation after it had an extended advance.

 


 
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 Copper Leading


 

The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently copper is outperforming and gold is underperforming.