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07/15/2018 – Market Update

July 16, 2018 Leave a comment

 

S&P 500 Challenges Key Resistance

 

The S&P 500 index is testing the upper resistance near 2795. A successful break above this resistance could push the price toward a record high. The Indian stock market hit an all-time high while the Chinese stock struggled to bounce off a two-year low last week. It seems that global stock markets are in a mode of buying winners and selling losers. Crude oil is in a consolidation but the price still stay inside a 1-year uptrend channel. Gold is bearish with a mid-tern downtrend channel. The broad stock market is projected to be in a short-term bullish time-window until 7/23/2018.

 
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 5 on Friday 7/13/2018 (down from 9 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 7/23/2018 (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: 7/23/2018
Broad Market Instability Index (BIX): 5, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 


 
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 3.20% above the EMA89. Outperforming sectors are Internet (8.97%), Biotech (5.76%), and Consumer Services (5.34%). Underperforming sectors are Banks (-2.38%), Home Construction (-2.07%), and Precious Metals (-1.76%).
 

 

 
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.

 

The S&P 500 index on daily chart is forming a 5-month ascending triangle pattern. It is neutral before the price breaks out from the triangle. Last week the price breached the upper boundary of the triangle. If upward breaking out from the triangle is confirmed, an upside price target would be projected at 2985.

 


 
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 Broke above 2.5-month Rising Wedge Pattern

 

The India Bombay Stock Exchange 30 Sensex index formed a 2.5-month rising wedge wedge pattern. The price broke above the upper boundary of the wedge. It is bullish with an upside price target projected at 37300.

 


 
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.

 


 
US Treasury Bond Forming 5-Month Descending Broadening Wedge Pattern

 

The 30-year U.S. treasury bond index is forming a 5-month descending broadening wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
US Dollar Forming 2.5-Month Rising Wedge Pattern

 

The U.S. dollar index is forming a 2.5-month rising wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
Gold in 3.5-month Bearish Downtrend Channel

 

The gold index is forming a 3.5-month downtrend channel pattern, and it is bearish.

 

 
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 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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