06/17/2018 – Market Update
Stock Market Lost Upside Momentum
The stock market lost upside momentum after the Fed raised interest rate last week. The US dollar resumed its advance sharply while gold and silver had a huge drop. The Shanghai Stock Exchange Composite index is at a critical point to break down as its price is breaching a long-term support level at 3050. The broad stock market is projected to be in a short-term bullish time-window until 6/20/2018, followed by a bearish time-window right after.
Table of Contents
- Broad Market in Short-Term Bullish Time-Window
- Sector Performance Ranking with Internet Sector Leading
- S&P 500 Index in Primary Upward Wave 5
- German DAX Index: Elliott Wave
- India Bombay Index Forming 2.5-month Ascending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Forming 4.5-Month Broadening Triangle Pattern
- US Dollar in Consolidation
- Gold Forming 2.5-month Bearish Downtrend Channel
- Silver Forming 11.5-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 Bullish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 19 on Friday 6/15/2018 (up
from 13 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 negative. 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, followed by a bearish time-window right after (see the second table below).
from 13 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 negative. 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, followed by a bearish time-window right after (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): 19, below the panic threshold (bullish)
Momentum Indicator: slightly negative (neutral)
Sector Performance Ranking with Internet 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 3.23% above the EMA89. Outperforming sectors are Internet (8.14%), Consumer Services (6.42%), and Semiconductors (6.11%). Underperforming sectors are Home Construction (-2.55%), Telecommunication (-2.03%), and Banks (-1.47%).
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 29-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 29-month bullish uptrend channel.
The S&P 500 index on daily chart is forming a 3-month rising wedge pattern. This rising wedge is associated with upward sub-wave 1 of intermediate upward wave (5), and it is a typical leading diagonal which indicates the early stage of an intermediate upward wave.
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. Last week the price breached the support level.
US Treasury Bond Forming 4.5-Month Broadening Triangle Pattern
The 30-year U.S. treasury bond index is forming a 4.5-month broadening triangle pattern. The broadening aspect of this pattern suggests increasing price volatility with uncertain price movement.
The U.S. dollar index is in a consolidation after it had an extended advance.
Gold Forming 2.5-month Bearish Downtrend Channel
The gold index is forming a 2.5-month downtrend channel pattern, and it is bearish.
Silver Forming 11.5-Month Symmetrical Triangle Pattern
The silver index is forming a 11.5-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. Now the price is testing the lower boundary.
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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