Home > News > 01/06/2019 – Market Update

01/06/2019 – Market Update

 

V-Shaped Recovery Continued

 

The broad stock market continued a V-shaped recovery into the second week as readings of our Broad Market Instability Index came down below the panic threshold. The S&P 500 index is forming a 3-month descending broadening wedge pattern associated with the downward wave C of an one-year-long extended flat corrective A-B-C wave sequence. Uncertainty remains and the upper boundary of the wedge will be a reference line to test market strength, depends on if the price is able to reach the upper boundary or breaks through. The 30-year U.S. treasury bond turned bullish after its price broke above the upper resistance level of a 11-month descending broadening wedge pattern. Gold and silver have reached their short-term upside price targets and price consolidations on them are expected to be the next. The broad stock market is projected to be in a short-term bullish time-window until 1/16/2019.

 
Table of Contents


 

 

Broad Market in Short-Term Bullish Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 2 on Friday 1/4/2019 (down from 19 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 1/16/2019 (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: 1/16/2018
Broad Market Instability Index (BIX): 2, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 


 
Sector Performance Ranking with Precious Metals 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 Precious Metals, Utilities, and Healthcare. 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 early last year, and it has a ABC sub-wave sequence. This ABC corrective sequence formed a expended flat formation which wave B extends beyond the start of wave A, and wave C extends beyond the end of wave A. It is typical that people tend to become very emotional with a very volatile market during wave C. The end of wave C could provide a great trading opportunity.

 

The S&P 500 index on daily chart below formed a 3-month descending broadening wedge pattern during wave C. The broadening wedge indicates a volatile market with great uncertainty. The upper boundary of the wedge will be a reference line to test market strength, depends on if the price is able to reach the upper boundary or breaks through.

 


 
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 ABC sub-wave sequence. Now it is in Downward sub-wave C.

 


 
India Bombay Index Forming 9-Week Trading Range


 

The India Bombay Stock Exchange 30 Sensex index is forming a 9-week trading range between 35600 and 36500. It is neutral before the price breaks out from the range.

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index is forming a 3-month descending triangle pattern. It is neutral before the price breaks out from the pattern.

 

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 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 has broken the upper boundary of the wedge. It is bullish with an upside price target projected at 151.

 


 
US Dollar Forming 9-Week Trading Range Pattern


 

The U.S. dollar index is forming a 9-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 has broken above the upper boundary of the range. It is bullish with an upside price target projected at 1285. This price target was reached last week, and a consolidation is the next.

 

 
Silver Broke above 4-Month Descending Broadening Wedge


 

The silver index formed a 4-month descending broadening wedge pattern. The price has broken above the horizontal boundary of the wedge. It is bullish with an upside price target projected at 15.5. This price target was reached last week, and a consolidation is the next.

 

 
Crude Oil Forming 8-Week Descending Broadening Wedge Pattern


 

The crude oil index is forming a 8-week descending broadening wedge pattern. It is neutral before the price breaks out from the pattern.

 


 
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.

 

  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: