07/22/2018 – Market Update
The Stock Market Lost Momentum
The general stock market was flat last week. The S&P 500 index lost momentum with a price setback, and it is likely to retest the key level near 2795 this coming week. Gold bounced off the lower boundary of its mid-term bearish downtrend channel as the US dollar pulled back from 8-month highs. Crude oil still stays in the 1-year bullish uptrend channel. 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
- Sector Performance Ranking with Internet Sector Leading
- S&P 500 Index in Primary Upward Wave 5
- German DAX Index: Elliott Wave
- India Bombay Index Broke above 2.5-month Rising Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Forming 5.5-Month Descending Broadening Wedge Pattern
- US Dollar Forming 2.5-Month Rising Wedge Pattern
- Gold in 3.5-month Bearish Downtrend Channel
- Crude Oil in 1-Year Bullish Uptrend Channel
- Asset Class Performance Ranking with Crude Oil Leading
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 10 on Friday 7/20/2018 (up from 5 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 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: peak
Date of Next Cycle Low: 8/10/2018
Broad Market Instability Index (BIX): 10, below the panic threshold (bullish)
Momentum Indicator: slightly negative (neutral)
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 Biotech. Underperforming sectors are Precious Metals, Oil Equipment, and Home Construction.
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 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.
Intermediate upward wave (5) is in progress. 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 formed a 5-month ascending triangle pattern. Although the price has crossed above the upper resistance line of the pattern, but there is no decisive breakout except a pull back. The price is likely to retest the upper boundary of the triangle.
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 5.5-Month Descending Broadening Wedge Pattern
The 30-year U.S. treasury bond index is forming a 5.5-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. Last Friday the price bounced 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.
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