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01/13/2019 – Market Update

January 13, 2019 Leave a comment Go to comments

 

V-Shaped Recovery Extended

 

The broad stock market continued a V-shaped recovery into the third week as readings of our Broad Market Instability Index remained very low level below the panic threshold. Gold, silver and the 30-year U.S. treasury bond were in consolidation last week after their breakout rally. The S&P 500 index is forming a 3.5-month descending broadening wedge pattern, and it will be a challenge for the price to reach the upper boundary of the wedge in the coming week as the projected short-term bullish time-window is nearing the end. Watch out for a partial rise inside the descending broadening wedge because it could be a dangerous sign for the price to go down again for testing recent lows. 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 4 on Friday 1/11/2019 (up from 2 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: 1/16/2019
Broad Market Instability Index (BIX): 4, 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, Telecommunication, and Utilities. Underperforming sectors are Oil Equipment, Energy, and Technology.

 

 

 
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 had 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 3.5-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. Watch out a partial rise because it could be a dangerous sign to go down again for testing recent 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 ABC sub-wave sequence. Now it is in Downward sub-wave C.

 


 
India Bombay Index Forming 10-Week Trading Range


 

The India Bombay Stock Exchange 30 Sensex index is forming a 10-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 3.5-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 formed 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 8-Month Ascending Broadening Pattern


 

The U.S. dollar index is forming a 8-month ascending broadening wedge pattern. 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 has been reached, and now it is in a consolidation.

 

 
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 has been reached, and now it is in a consolidation.

 

 
Crude Oil Broke above 8-Week Descending Broadening Wedge Pattern


 

The crude oil index formed a 8-week descending broadening wedge pattern. The price broke above the upper boundary of the wedge last week. It is bullish with an upside price target projected at 58.

 


 
Asset Class Performance Ranking with Gold 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 Gold is outperforming and Crude Oil is underperforming.

 

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