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07/29/2018 – Market Update

July 29, 2018 Leave a comment

 

Stocks Turned Choppy

 

The general stock market turned choppy and trendless last week as readings of our Broad Market Instability index increased. After the price reached the upper boundary of a 4-month uptrend channel, the S&P 500 index pulled back sharply on Friday. The broad stock market is projected to be in a short-term bearish time-window until 8/10/2018.

 
Table of Contents


 

 

Broad Market to be in Short-Term Bearish Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 33 on Friday 7/27/2018 (up from 10 the previous week) which is close to the panic threshold level of 42 and indicates a neutral 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 8/10/2018 (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: 8/10/2018
Broad Market Instability Index (BIX): 33, close to the panic threshold (neutral)
Momentum Indicator: negative (bearish)

 


 
Sector Performance Ranking with Internet Sector Leading


 

The following table ranks sectors by using the StockCharts Technical Rank (SCTR) based on six key indicators which cover long-term, medium-term and short-term timeframes. Outperforming sectors are Internet , Technology, and Consumer Services. Underperforming sectors are Precious Metals, Home Construction, and Telecommunication.
 

 

 
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) is in progress. This wave is the last intermediate upward wave of primer wave [5], and it will have a 12345 sub-wave sequence. Now it is in corrective sub-wave 2. 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 below is forming a 4-month uptrend channel. Upward mini-wave b of corrective sub-wave 2 reached the upper boundary of the channel last week, and downward mini-wave c just started.

 


 
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 Reached Upside Price Target


 

The India Bombay Stock Exchange 30 Sensex index formed a 2.5-month rising wedge wedge pattern. After the price broke above the upper boundary of the wedge, it has been bullish with an upside price target projected at 37300. This price target was reached last week, and a consolidation is likely to be the next.

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

After the price broke below the lower horizontal boundary of a 22-month ascending broadening right-angle pattern, the Shanghai Stock Exchange Composite index had a sharp decline near 2700 level. Currently it is in a dead-cat bounce, and a post-bounce decline is likely to be the next.

 


 
US Treasury Bond Forming 6-Month Descending Broadening Wedge Pattern


 

The 30-year U.S. treasury bond index is forming a 6-month descending broadening wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
US Dollar Forming 3-Month Rising Wedge Pattern


 

The U.S. dollar index is forming a 3-month rising wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
Gold in 4-month Bearish Downtrend Channel


 

The gold index is forming a 4-month downtrend channel pattern, and it is bearish. The price is looking for a bounce off the lower boundary of the downtrend channel.

 

 
Silver Broke below 1-Year Symmetrical Triangle Pattern


 

The silver index formed a 1-year symmetrical triangle pattern. Recently the price has broken below the lower boundary of the triangle. It is bearish with a downside price target projected at 15.

 

 
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 in a consolidation after recent sharp advance.

 


 
Asset Class Performance Ranking with Crude Oil Leading


 

The following table ranks asset class by using the StockCharts Technical Rank (SCTR) based on six key indicators which cover long-term, medium-term and short-term timeframes. Currently crude oil is outperforming and copper is underperforming.