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11/25/2018 – Market Update

November 26, 2018 Leave a comment

 

SPX Retesting October Low

 

The stock market declined sharply last week but readings of our Broad Market Instability Index were not beyond the panic threshold level. The S&P 500 index is in downward sub-wave C of a corrective A–B–C sub-wave sequence, and is testing the low of last month. The 30-year U.S. treasury bond strengthened after its price broke above a short-term trading range last week. The US dollar is forming a short-term uptrend and gold is still traded in a trading range. The broad stock market is projected to be in a short-term bearish time-window until 12/5/2018.

 
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 42 on Friday 11/23/2018 (up from 36 the previous week) which is at the panic threshold level of 42 and indicates a bearish market. The Wilshire 5000 index is below the 89-day exponential moving average, and the momentum is slightly positive. 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 12/5/2018 (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: downward
Date of Next Cycle Low: 12/5/2018
Broad Market Instability Index (BIX): 42, at the panic threshold (bearish)
Momentum Indicator: slightly positive (neutral)

 


 
Sector Performance Ranking with Utilities 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 Utilities, Healthcare, and Real Estate. Underperforming sectors are Oil Equipment, Energy, 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.

Now it is in intermediate corrective wave (4). This intermediate corrective wave extends the correction started from the early this year, and it has a A–B–C sub-wave sequence. The downward move started last month is sub-wave C which is the last wave of intermediate corrective wave (4). There is a bearish sign that downward sub-wave C has broken below the lower boundary of a 3-year bullish uptrend channel.

 

The S&P 500 index on daily chart below formed a 4-month rising wedge pattern. Downward sub-wave C of intermediate corrective wave (4) has broken below the lower boundary of the rising wedge. This downward sub-wave C is expected to have a i-ii-iii-iv-v mini-wave sequence. Now it is in downward mini-wave v, and it may retest the low of last month.

 


 
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 it is in intermediate corrective wave (4) which has a A–B–C sub-wave sequence. Now it is still in Downward sub-wave C.

 


 
India Bombay Index Forming 8-Week Descending Broadening Triangle Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 8-week descending broadening triangle pattern. It is bearish as long as the price is below the horizontal boundary of the triangle.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index is forming a 10-month falling wedge pattern. It is bearish as long as the price is below the upper boundary of the wedge.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 3.5-year descending triangle pattern. The price breached the lower boundary of the triangle. It is bearish with a downside price target projected at 2000 as long as the price is below the lower boundary of the triangle.

 


 
US Treasury Bond Broke above 7-Week Trading Range Pattern

 

The 30-year U.S. treasury bond index formed a 7-week trading range between 136.5 and 138.8. Last week the price broke above the upper boundary of the range. Based on this breakout, an upside price target is projected at 140.

 


 
US Dollar Forming 2-Month Bullish Uptrend Channel

 

The U.S. dollar index is forming a 2-month uptrend channel. It is bullish as long as the price stays above the lower boundary of the channel.

 


 
Gold in 4-Month Trading Range

 

The gold index is forming a 4-month horizontal trading range between 1185 and 1240. It is neutral before the price breaks out from the range.

 

 
Silver Forming 3-Month Descending Broadening Wedge

 

The silver index is forming a 3-month descending broadening wedge pattern. It is bearish as long as the price is below the horizontal boundary of the wedge.

 

 
Crude Oil Broke Below 1-Year Ascending Broadening Wedge Pattern

 

The crude oil index formed a 1-year ascending broadening wedge. The price has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 55. This price target has been crossed over under a sharp selloff.

 


 
Asset Class Performance Ranking with US Dollar 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 the US dollar is outperforming and Crude Oil is underperforming.
 
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