09/23/2018 – Market Update
Markets Flat Ahead of Fed Decision
The general stock market was flat with mixed performances among major market indexes as the Dow advanced and the Nasdaq pulled back last week. The market volatility remained very low and the momentum was in the negative territory. The 30-year U.S. treasury bond index reached the projected downside price target 140 and a consolidation is expected next. The broad stock market is projected to be in a short-term bullish time-window until 10/5/2018.
Table of Contents
- Broad Market in Short-Term Bullish Time-Window
- Sector Performance Ranking with Healthcare Sector Leading
- S&P 500 Index in Primary Upward Wave 5
- German DAX Index: Elliott Wave
- India Bombay Index Broke Below 5-Month Uptrend Channel
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Broke below 3-Month Symmetrical Triangle Pattern
- US Dollar Broke Below 4.5-Month Ascending Broadening Wedge Pattern
- Gold Forming 5.5-Month Descending Broadening Wedge Pattern
- Crude Oil Forming 10.5-Month Ascending Broadening Wedge Pattern
- Asset Class Performance Ranking with Crude Oil Leading
Broad Market in Short-Term Bullish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 16 on Friday 9/21/2018 (down from 21 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 the Leading Wave Index (LWX), the broad stock market is projected to be in a short-term bullish time-window until 10/5/2018 (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: upward
Date of Next Cycle High: 10/5/2018
Broad Market Instability Index (BIX): 16, below the panic threshold (bullish)
Momentum Indicator: slightly negative (neutral)
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 Internet. Underperforming sectors are Precious Metals, Home Construction, and Semiconductors.
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.
Currently it is in intermediate upward wave (5) which is going to a 1–2–3–4–5 sub-wave sequence. Now it is near the late part of upward sub-wave 1. The weekly chart below shows a long-term picture of the SPX staying in a 2.5-year bullish uptrend channel.
Currently it is in intermediate upward wave (5) which is going to a 1–2–3–4–5 sub-wave sequence. Now it is near the late part of upward sub-wave 1. 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 4-month rising wedge pattern which corresponds to upward sub-wave 1 of the 1–2–3–4–5 sub-wave sequence. This rising wedge in sub-wave 1 is likely to be a leading diagonal which has a bullish indication.
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 a–b–c sub-wave sequence. Currently is in downward sub-wave c. Please note that it is forming a head-and-shoulders pattern and the price is near the neckline of the pattern.
India Bombay Index Broke below Uptrend Channel
The India Bombay Stock Exchange 30 Sensex index formed a 6-month uptrend channel pattern. The price broke below the lower boundary of the channel. It is a bearish sign for the short-term trend.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 9-month falling wedge pattern. It is bearish as long as the price stays below the upper boundary of the wedge. Currently the price is testing 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 tested the lower horizontal boundary at 2700 and rebounded last week. The long-term picture is neutral as long as the price is below the upper boundary of the triangle.
US Treasury Bond Broke below 3-Month Symmetrical Triangle Pattern
The 30-year U.S. treasury bond index formed a 3-month symmetrical triangle pattern. Recently the price has broken below the lower boundary of the triangle with a downside price projected at 140. This price target was reached last week, and a consolidation is expected next.
US Dollar Broke Below 4.5-Month Ascending Broadening Wedge
The U.S. dollar index formed a 4.5-month ascending broadening wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish with a downside price target projected at 92.5.
Gold Forming 5.5-Month Descending Broadening Wedge Pattern
The gold index is forming 5.5-month descending broadening wedge pattern. It is bearish as long as the price stays below the upper boundary of the wedge.
Silver Forming 3-Month Bearish Downtrend Channel Pattern
The silver index formed a 3-month downtrend channel pattern. The price breached the upper boundary of the channel. It would turn short-term bullish if a breakout is confirmed.
Crude Oil Forming 10.5-Month Ascending Broadening Wedge Pattern
The crude oil index is forming a 10.5-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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