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09/09/2018 – Market Update

September 9, 2018 Leave a comment Go to comments

 

Market Mood Cautious

 

The general stock market pulled back from all-time highs last week as the market momentum turned into the negative territory and readings of our Broad Market Instability Index jumped above the panic threshold level. Elliott Wave analysis suggests that the S&P 500 index continues its 7-month-long intermediate correction with a flat corrective formation made up of a 3-wave, a-b-c sequence. Wave c just started last week and it is the last downward wave of this intermediate correction. 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


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 58 on Friday 9/7/2018 (up from 17 the previous week) which is above the panic threshold level of 42 and indicates a bearish market. The Wilshire 5000 index is above the 89-day exponential moving average, and the momentum is negative. Based on the forecast of the Leading Wave Index (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 Leading Wave Index (LWX) Indicator in Last Four Weeks (Actual)

 

The Leading Wave Index (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: 9/24/2018
Broad Market Instability Index (BIX): 58, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)

 


 
Sector Performance Ranking with Healthcare 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 Healthcare , Consumer Services, and Pharmaceuticals. 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 downgraded to intermediate corrective wave (4). This wave is a large scale corrective wave and consists of a abc sub-wave sequence. Upward sub-wave b terminates substantially beyond the starting level of sub-wave a as in an expanded flat. Now downward sub-wave c just started. This abc sub-wave formation could become either an expanded flat or a running flat depending on where sub-wave c will end. More details about flat wave formations can be found here. 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 which corresponds to upward sub-wave b of the abc sub-wave sequence. Currently it is in downward mini-wave 1 of downward sub-wave c. The price pulled back from the upper boundary of the channel, and it is moving towards the lower boundary of the channel. Downward sub-wave c may have a 12345 mini-wave sequence.

 


 
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. Now intermediate upward wave (5) is downgraded to intermediate corrective wave (4) which has a abc sub-wave sequence. Currently is in downward sub-wave c.

 


 
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 pulled 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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