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02/17/2019 – Market Update

February 19, 2019 Leave a comment Go to comments

 

Stocks Extended Rally Despite Negative Divergence Sign

 

The broad stock market extended rally last week. The combination of both low market volatility and low market momentum gives the stock market a neutral view. Gold, silver, 30-year U.S. treasury bond, and US dollar maintain bullish momentum. Crude oil is at the edge for a potential bullish breakout from a head-and-shoulders bottom pattern. The broad stock market is projected to be in a short-term neutral time-window until 3/12/2019.

 
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 4 on Friday 2/15/2019 (down from 11 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 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 3/12/2019 (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: 3/12/2019
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, Real Estate, and Semiconductors. Underperforming sectors are Oil Equipment, Materials, 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.

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. Intermediate corrective wave (4) which has a ABC sub-wave sequence has ended. Now it is in intermediate upward wave (5) which will have a 12345 sub-wave sequence.

 


 
India Bombay Index Forming 2.5-Month Rising Wedge Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 2.5-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 has broken above the upper boundary of the triangle. It is bullish with an upside price target projected at 2820 as long as the price stays above the upper boundary of the triangle.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 4-year falling wedge pattern. It is neutral before the price breaks out from the pattern.

 


 
US Treasury Bond Forming 12-month Broadening Triangle Pattern


 

The 30-year U.S. treasury bond index is forming 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 4.5-Month Rising Wedge Pattern


 

The gold index is forming a 4.5-month rising wedge pattern. It is neutral before the price break out from the wedge.

 

 
Silver Forming 4.5-Month Rising Wedge Pattern


 

The silver index is forming a 4.5-month rising wedge pattern. It is neutral before the price break out from the wedge.

 

 
Crude Oil Forming Inverted Head-and-Shoulders Pattern


 

The crude oil index is forming a 3-month inverted head-and-shoulders pattern. Now the price is testing the neckline. Once the price breaks above the neckline, an upside price target would be projected at 64.

 


 
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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