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07/01/2018 – Market Update

July 2, 2018 Leave a comment Go to comments

 

Strong Crude Oil and US Dollar

 

The Chinese stock market is sinking in a bear market territory and global stocks are weakening as US-China trade war threat is bringing anxiety. The S&P 500 index is in a short-term corrective wave. Crude oil and the US dollar are bullish while gold and silver are bearish. 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

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 36 on Friday 6/29/2018 (up from 23 the previous week) which is below but near the panic threshold level of 42 and indicates a neutral market. The Wilshire 5000 index is slightly 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): 36, near the panic threshold (neutral)
Momentum Indicator: negative (bearish)

 


 
Sector Performance Ranking with Real Estate 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 0.58% above the EMA89. Outperforming sectors are Real Estate (4.01%), Energy (3.89%), and Internet (3.82%). Underperforming sectors are Home Construction (-5.08%), Banks(-3.63%), and Semiconductors (-2.77%).
 

 

 
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 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. Corrective sub-wave 2 will likely test the lower boundary of the uptrend channel this coming week.

 

The S&P 500 index on daily chart formed 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. Now it is in corrective sub-wave 2. Last week the price broke below the lower boundary of the rising wedge. Based on this bearish breakout, the downside price target is projected at 2640 for corrective sub-wave 2.

 


 
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 2.5-month Rising Wedge Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 2.5-month rising wedge wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.

 


 
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. This price target was breached last week. The next downside price target is projected at 2650.

 


 
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.

 


 
US Dollar Forming 2-Month Rising Wedge Pattern

 

The U.S. dollar index is forming a 2-month rising wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.

 


 
Gold Forming 3-month Bearish Downtrend Channel

 

The gold index is forming a 3-month downtrend channel pattern, and it is bearish.

 

 
Silver Breached below 1-Year Symmetrical Triangle Pattern

 

The silver index formed a 1-year symmetrical triangle pattern. Last week the price breached 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 sharply approaches the upper boundary of the channel.

 


 
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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