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03/03/2019 – Market Update

March 4, 2019 Leave a comment Go to comments

 

S&P 500 Facing Major Resistance

 

The broad stock market was flat last week with weakening momentum. The S&P 500 index is approaching the 2820 level which has been a major resistance during last four months. Last week the price of gold and silver broke downward from their 5-month rising wedge patterns, and the Chinese stock market had a sharp bullish breakout on both short-term and long-term chart patterns. The broad stock market is projected to be in a short-term bearish time-window until 3/13/2019.

 
Table of Contents

 

 

Broad Market in Short-Term Bearish Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 12 on Friday 3/1/2019 (up from 3 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 near 0. 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 3/13/2019 (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: peak
Date of Next Cycle Low: 3/22/2019
Broad Market Instability Index (BIX): 12, below the panic threshold (bullish)
Momentum Indicator: near zero (neutral)

 

 
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, Industrials, and Precious Metals. Underperforming sectors are Oil Equipment, Energy, and Home Construction.

 

 

 
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 A–B–C sub-wave sequence. This A–B–C 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 1–2–3–4–5 sub-wave sequence. Currently it is still in upward sub-wave 1, and corrective sub-wave 2 will be the next.

 

The S&P 500 index on daily chart below formed a 4.5-month descending broadening triangle pattern. Now the price is going to test the upper horizontal boundary near the 2820 level which is a major resistance. If the price breaks above this level, the index will shoot up to the 2925 level.

 


 
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 A–B–C sub-wave sequence has ended. Now it is in intermediate upward wave (5) which will have a 1–2–3–4–5 sub-wave sequence.

 


 
India Bombay Index Forming 3-Month Ascending Triangle Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 3-month ascending triangle pattern. It is neutral before the price breaks out from the pattern.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

Last week the Shanghai Stock Exchange Composite index broke above the neckline of a double-bottom pattern. It is a bullish with an upside price target projected at 3125.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 4-year falling wedge pattern. Last week the price breached the upper boundary of the wedge. It is bullish with an upside price target projected at 3450 as long as the price stays above the upper boundary of the wedge.

 


 
US Treasury Bond Forming 1-Year Broadening Triangle Pattern

 

The 30-year U.S. treasury bond index is forming a 1-Year 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 9-Month Ascending Broadening Pattern

 

The U.S. dollar index is forming a 9-month ascending broadening wedge pattern. It is neutral before the price breaks out from the pattern.

 


 
Gold Broke Down from 5-Month Rising Wedge Pattern

 

The gold index formed a 5-month rising wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish with a downside price target projected at 1245.

 

 
Silver Broke Down from 5-Month Rising Wedge Pattern

 

The silver index formed a 5-month rising wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish with a downside price target projected at 14.7.

 

 
Crude Oil Forming 2.5-Month Rising Wedge Pattern

 

The crude oil index is forming a 2.5-month rising wedge pattern. It is neutral before the price breaks out from the wedge.

 


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

 

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