12/23/2019 – Market Update
Tumbling Stock Market
The broad stock market declined sharply last week. The market volatility jumped up as readings of our Broad Market Instability Index surged up the highest level since January 2016. Both the 30-year U.S. treasury bond and gold moved up. The broad stock market is projected to be in a short-term bearish time-window until 12/31/2018.
Table of Contents
- Broad Market in Short-Term Bearish Time-Window
- Sector Performance Ranking with Utilities Sector Leading
- S&P 500 Index in Primary Upward Wave 5
- German DAX Index: Elliott Wave
- India Bombay Index Forming 7-Week Ascending Broadening Triangle Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Forming 11-month Descending Broadening Wedge Pattern
- US Dollar Forming 7-Week Trading Range Pattern
- Gold Broke above 4.5-Month Trading Range
- Crude Oil Broke Below 3-Week Symmetrical Triangle Pattern
- Asset Class Performance Ranking with US Treasury Bond Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 799 on Friday 12/21/2018 (up from 288 the previous week) which is above 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 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 12/31/2018 (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: 12/31/2018
Broad Market Instability Index (BIX): 799, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)
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, Precious Metals, and Real Estate. Underperforming sectors are Oil Equipment, Energy, and Biotech.
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). It is bearish that downward sub-wave C has broken below the lower boundary of a 3-year uptrend channel.
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). It is bearish that downward sub-wave C has broken below the lower boundary of a 3-year uptrend channel.
The S&P 500 index on daily chart below formed a 2-month trading range between 2630 and 2815 with a choppy a-b-c-d-e wave sequence of intermediate corrective wave (4). It was bearish as the price broke below the lower boundary of the range also February lows.
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 in Downward sub-wave C.
India Bombay Index Forming 7-Week Ascending Broadening Triangle Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 7-week ascending broadening triangle pattern. It is neutral before the price breaks out from the pattern.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 2.5-month symmetrical triangle pattern. Last week the price broke below the lower boundary of the triangle. It is bearish with a downside price target projected at 2460.
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 11-month Descending Broadening Wedge Pattern
The 30-year U.S. treasury bond index is forming a 11-month descending broadening wedge pattern. The price is testing the upper boundary of the wedge. It is neutral before the price breaks out from the pattern.
US Dollar Forming 7-Week Trading Range Pattern
The U.S. dollar index is forming a 7-week trading range pattern between 95.7 and 97.4. It is neutral before the price breaks out from the pattern.
Gold Broke above 4.5-Month Trading Range
The gold index formed a 4.5-month horizontal trading range between 1185 and 1240. The price broke above the upper boundary of the range. It is bullish with an upside price target projected at 1285.
Silver Forming 4-Month Descending Broadening Wedge
The silver index is forming a 4-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 3-Week Symmetrical Triangle Pattern
The crude oil index formed a 3-week symmetrical triangle pattern. The price broke below the lower boundary of the triangle last week. It is bearish for declining.
Asset Class Performance Ranking with US Treasury Bond 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 Treasury Bond is outperforming and Crude Oil is underperforming.
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