12/02/2018 – Market Update
Stocks Turned Bullish into December
The stock market rebounded sharply last week after it retested October lows. It is likely that the intermediate correction with a corrective A–B–C sub-wave sequence is ending and an intermediate upward wave starts. But the SPX needs to break the upper resistance level at 2815. The 30-year U.S. treasury bond advanced after its price broke above a short-term trading range. The US dollar stayed in a short-term uptrend channel and gold is still in a horizontal trading range. The broad stock market is projected to be in a short-term bullish time-window until 12/17/2018.
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 above 8-Week Descending Broadening Triangle Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Broke above 7-Week Trading Range Pattern
- US Dollar Forming 2.5-Month Bullish Uptrend Channel
- Gold in 4.5-Month Trading Range
- Crude Oil Broke Below 1-Year Ascending Broadening Wedge Pattern
- Asset Class Performance Ranking with US Dollar Leading
Broad Market in Short-Term Bullish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 12 on Friday 11/30/2018 (down from 42 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 positive. 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 12/17/2018 (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: 12/17/2018
Broad Market Instability Index (BIX): 12, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)
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, Utilities, 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 from October 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. However, the price may move up to retest the trendline as downward sub-wave C is likely to end.
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 from October 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. However, the price may move up to retest the trendline as downward sub-wave C is likely to end.
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 had a i-ii-iii-iv-v mini-wave sequence. As downward mini-wave v ended, it is most likely that downward sub-wave C and intermediate corrective wave (4) are ending. Now it should be in upward sub-wave 1 of intermediate upward wave (5).
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 formed a 8-week descending broadening triangle pattern. The price broke above the upper horizontal boundary of the pattern last week. It becomes bullish with an upside price target projected at
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 11-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. The price has broken above the upper boundary of the range. Based on this breakout, an upside price target is projected at 140.
US Dollar Forming 2.5-Month Bullish Uptrend Channel
The U.S. dollar index is forming a 2.5-month uptrend channel. It is bullish as long as the price stays above the lower boundary of the channel.
Gold in 4.5-Month Trading Range
The gold index is forming a 4.5-month horizontal trading range between 1185 and 1240. It is neutral before the price breaks out from the range.
Silver Forming 3.5-Month Descending Broadening Wedge
The silver index is forming a 3.5-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 with 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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