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02/10/2019 – Market Update

February 11, 2019 Leave a comment Go to comments

 

Bullish Momentum Weakening

 

The broad stock market started to pull back as bullish momentum weakened last week. Elliott wave analysis suggests that the S&P 500 index should start a short-term corrective wave after the powerful V-shaped recovery. Gold, silver, and the 30-year U.S. treasury bond still keep up bullish momentum. The broad stock market is projected to be in a short-term neutral time-window until 2/25/2019.

 
Table of Contents


 

 

Broad Market in Short-Term Neutral Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 11 on Friday 2/8/2019 (up from 6 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is above 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 neutral time-window until 2/25/2019 (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: downward
Date of Next Cycle Low: 2/25/2019
Broad Market Instability Index (BIX): 11, below the panic threshold (bullish)
Momentum Indicator: slightly positive (neutral)

 

 
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, Real Estate, and Utilities. Underperforming sectors are Oil Equipment, Energy, and Materials.

 

 

 
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.

Intermediate corrective wave (4) extended 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.

Now intermediate upward wave (5) has started. This intermediate wave should have a 12345 sub-wave sequence. Currently upward sub-wave 1 is ending, and corrective sub-wave 2 will be the next..

 

The S&P 500 index on daily chart below formed a 4-month descending broadening wedge pattern. Recently the price has broken above the upper boundary of the wedge. It is bullish with an upside price target projected at 2925, as long as the price stays above the upper boundary of the wedge.

 


 
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. Downward sub-wave C has ended.

 


 
India Bombay Index Forming 2-Month Rising Wedge Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 2-month rising wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index formed a 4-month descending triangle pattern. The price broke above the upper boundary of the triangle. This is a short-term bullish sign for the index as long as the price stays above the upper boundary of the triangle. The Chinese stock market was closed last week for Chinese New Year holidays.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 4-year descending triangle pattern. The price breached the lower boundary of the triangle. It is bearish in intermediate-term with a downside price target projected at 2000 as long as the price is below the lower boundary of the triangle. The Chinese stock market was closed last week for Chinese New Year holidays.

 


 
US Treasury Bond Forming 12-month Broadening Triangle Pattern


 

The 30-year U.S. treasury bond index formed a 12-month broadening triangle pattern. The broadening triangle indicates a volatile market with great uncertainty. It is neutral before the price break out from the triangle.

 


 
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 Forming 4-Month Rising Wedge Pattern


 

The gold index is forming a 4-month rising wedge pattern. It is neutral before the price break out from the wedge.

 

 
Silver Forming 4-Month Rising Wedge Pattern


 

The silver index is forming a 4-month rising wedge pattern. It is neutral before the price break out from the wedge.

 

 
Crude Oil V-Shaped Recovery


 

The crude oil index had a V-shaped recovery, and is forming a 2-month inverted head-and-shoulders pattern. Now it is forming the right shoulder.

 


 
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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