09/02/2018 – Market Update
Watch Out for September Turbulence
The S&P 500 index made all-time highs as its price hit the upper boundary of a 5-month uptrend channel last week. But the momentum of the general stock market is weakening, and we could see a pullback in the next a couple of weeks. The 30-year U.S. treasury bond index is on the verge of a bullish breakout from an inverse head and shoulders pattern as the price of the index is about to challenge the neckline of the pattern. The U.S. dollar bounced off the lower boundary of a 4-month uptrend channel, and continued to add a pressure on gold and silver. The broad stock market is projected to be in a short-term bearish time-window until 9/24/2018.
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 5-Month Bullish Uptrend Channel
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Forming 7-Month Inverse Head-and-Shoulders Pattern
- US Dollar in 4-Month Bullish Uptrend Channel Pattern
- Gold Forming 5-Month Descending Broadening Wedge Pattern
- Crude Oil Forming 10-Month Ascending Broadening Wedge Pattern
- 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 17 on Friday 8/31/2018 (up from 11 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 positive. Based on the forecast of LWX, the broad stock market is projected to be in a short-term bearish time-window until 9/24/2018 (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: 9/24/2018
Broad Market Instability Index (BIX): 17, below the panic threshold (bullish)
Momentum Indicator: slightly positive (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 , Consumer Services, and Pharmaceuticals. Underperforming sectors are Precious Metals, Home Construction, and Consumer Goods.
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 upward sub-wave 3. The weekly chart below shows a long-term picture of the SPX staying in a 2.5-year 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 upward sub-wave 3. The weekly chart below shows a long-term picture of the SPX staying in a 2.5-year bullish uptrend channel.
The S&P 500 index on daily chart below is forming a 5-month uptrend channel. Currently it is in an upward mini-wave iii of upward sub-wave 3. The price just started to pull back from the upper boundary of the channel.
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 5-Month Bullish Uptrend Channel
The India Bombay Stock Exchange 30 Sensex index is forming a 5-month bullish uptrend channel pattern. The price just started to pull back from the upper boundary of the channel.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 8-month falling wedge pattern. It is bearish as long as the price stays below the upper boundary of the wedge.
In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 3.5-year descending triangle pattern. The price is testing the lower horizontal boundary at 2700. Once the price breaks below the horizontal boundary, the downside price target would be projected at 2000. How to trade triangle chart patterns can be found here.
US Treasury Bond Formed 7-Month Inverse Head-and-Shoulders Pattern
The 30-year U.S. treasury bond index formed a 7-month inverse head-and-shoulders pattern. The price is near the neckline. If the price breaks above the neckline, an upside price target would be projected at 148.
US Dollar in 4-Month Bullish Uptrend Channel Pattern
The U.S. dollar index is forming a 4-month bullish uptrend channel pattern. It is bullish as long as the price remains above the lower boundary of the channel.
Gold Forming 5-Month Descending Broadening Wedge Pattern
The gold index is forming 5-month descending broadening wedge pattern. It is bearish as long as the price stays below the upper boundary of the wedge.
Silver Forming 2.5-Month Bearish Downtrend Channel Pattern
The silver index is forming a 2.5-month bearish downtrend channel pattern. It is bearish as long as the price stays below the upper boundary of the channel.
Crude Oil Forming 10-Month Ascending Broadening Wedge Pattern
The crude oil index is forming a 10-month ascending broadening wedge. It is bullish as long as the price stays above the lower boundary of the wedge.
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 gold is underperforming.
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