06/24/2018 – Market Update
Trade War Fears Cast Shadow Over Global Stocks
Global stocks slid on U.S.-China trade war fears last week. The Chinese stock market decisively broke below a major support level, and plunged to two-year lows. The US stock market was choppy as the S&P 500 index appeared in a transition process from its 3-month upward wave to a short-term corrective wave. The crude oil still maintained a 1-year bullish uptrend trend. The broad stock market is projected to be in a short-term bearish time-window until 7/9/2018.
Table of Contents
- Broad Market in Short-Term Bearish 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 3-month Ascending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Forming 5-Month Broadening Triangle Pattern
- US Dollar in Consolidation
- Gold Forming 3-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 Crude Oil Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 23 on Friday 6/22/2018 (up from 19 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 negative. Based on the forecast of LWX, the broad stock market is projected to be in a short-term bearish time-window until 7/9/2018 (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: 7/9/2018
Broad Market Instability Index (BIX): 23, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)
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 2.18% above the EMA89. Outperforming sectors are Internet (8.29%), Consumer Services (5.67%), and Real Estate (4.06%). Underperforming sectors are Home Construction (-6.39%), Banks(-2.39%), and Telecommunication (-2.26%).
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 upward wave (5) has started. This wave is the last intermediate upward wave of primer wave [5], and it will have a 1–2–3–4–5 sub-wave sequence. Now upward sub-wave 1 is ending, and corrective sub-wave 2 is starting. The weekly chart below shows a long-term picture of the SPX staying in a 29-month bullish uptrend channel.
Intermediate upward wave (5) has started. This wave is the last intermediate upward wave of primer wave [5], and it will have a 1–2–3–4–5 sub-wave sequence. Now upward sub-wave 1 is ending, and corrective sub-wave 2 is starting. The weekly chart below shows a long-term picture of the SPX staying 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 intermediate upward wave (5) with corrective sub-wave 2.
India Bombay Index Forming 3-month Ascending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 3-month ascending broadening wedge pattern. 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 has broken below the lower horizontal boundary of its 22-month ascending broadening right-angle pattern. It is bearish with a downside price target projected at 2800.
US Treasury Bond Forming 5-Month Broadening Triangle Pattern
The 30-year U.S. treasury bond index is forming a 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 3-month Bearish Downtrend Channel
The gold index is forming a 3-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 bounced off the lower boundary.
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 copper is underperforming.
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