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11/18/2018 – Market Update

November 20, 2018 Leave a comment

 

Stocks Head into Short-Term Bearish Time Window

 

The S&P 500 index is in its intermediate corrective wave which extends the correction started from the early this year. This intermediate corrective wave has a A–B–C sub-wave sequence, and now downward sub-wave C is in progress. It is a bearish sign that downward sub-wave C has broken below the lower boundary of a 3-year uptrend channel of the SPX. Both gold and the 30-year U.S. treasury bond are neutral as their prices form short-term trading ranges. Crude oil has reached the projected downside price target at 55 last week. 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 36 on Friday 11/16/2018 (up from 33 the previous week) which is below the panic threshold level of 42 and indicates a bullish 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): 36, below the panic threshold (bullish)
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, Home Construction, and Energy.
 

 

 
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 broke 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 7-Week Descending Broadening Triangle Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 7-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 Forming 7-Week Trading Range Pattern

 

The 30-year U.S. treasury bond index is forming a 7-week trading range between 136.5 and 138.8. It is neutral before the price breaks out from the range.

 


 
US Dollar Forming 2-Month Rising Wedge Pattern

 

The U.S. dollar index is forming a 2-month rising wedge pattern. The price is going to test the lower boundary of the wedge. It would become bearish if the price breaks below the lower boundary of the wedge.

 


 
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 was reached last week. A consolidation is the next.

 


 
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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