Home > News > 03/10/2019 – Market Update

03/10/2019 – Market Update

 

Stock Market Retreated from Major Resistance

 

Last week the S&P 500 index failed to break above the 2820 level which has been a major resistance over last four months. The broad stock market had the biggest pullback for the V-shaped recovery since late December last year. The sharply advanced Chinese stock market retreated also after the Shanghai Stock Exchange Composite index reached the short-term price target near the 3125 level last week. Now stocks are in a short-term correction with a negative market momentum. The broad stock market is projected to be in a short-term bearish time-window until 3/21/2019.

 
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 28 on Friday 3/8/2019 (up from 12 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 negative. 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 3/21/2019 (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: 3/21/2019
Broad Market Instability Index (BIX): 28, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)

 

 
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 Real Estate. Underperforming sectors are Oil Equipment, Energy, and Biotech.

 

 

 
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 it is in intermediate upward wave (5). This intermediate wave should have a 12345 sub-wave sequence. Currently it is in a transition from upward sub-wave 1 to corrective sub-wave 2.

 

The S&P 500 index on daily chart below formed a 5-month descending broadening triangle pattern. Last week upward sub-wave 1 failed to break above the upper horizontal boundary near the 2820 level which is a major resistance during last four months. Now it is in corrective sub-wave 2.

 


 
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 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


 

Recently the Shanghai Stock Exchange Composite index has broken above the neckline of a double-bottom pattern. Based on this breakout, an upside price target was projected at 3125. This price target was reached last week, then the index pulled back sharply for a correction.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 4-year falling wedge pattern. Recently the price has 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 10-Month Rising Wedge Pattern


 

The U.S. dollar index is forming a 10-month rising 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 has broken below the lower boundary of the wedge. 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 has broken below the lower boundary of the wedge. 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 US Dollar 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 dollar is outperforming and Crude Oil is underperforming.

 

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