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03/17/2019 – Market Update

March 18, 2019 Leave a comment Go to comments

 

S&P 500 Retests Major Resistance

 

The broad stock market rebounded last week. The S&P 500 index is in a choppy mode with a short-term corrective wave. It is testing the 2820 level which has been a major resistance over last four months. If the price breaks above this level, the S&P 500 is most likely to shoot up to the 2925 level. Stocks could turn mixed ahead of Fed meeting this week. The 30-year U.S. treasury bond index has moved in a narrow trading range over two months, and are waiting for a breakout. The broad stock market is projected to be in a short-term neutral time-window until 3/21/2019.

 
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 20 on Friday 3/15/2019 (down from 28 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 neutral 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: upward
Date of Next Cycle High: 3/28/2019
Broad Market Instability Index (BIX): 20, 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 Semiconductors. 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 it is in intermediate upward wave (5). This intermediate wave should have a 1–2–3–4–5 sub-wave sequence. Currently it is in corrective sub-wave 2.

 

The S&P 500 index on daily chart below formed a 5-month descending broadening triangle pattern. Last week the price breached 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 which is a short-term sideways correction.

 


 
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 Broke above 3-Month Ascending Triangle Pattern

 

The India Bombay Stock Exchange 30 Sensex index formed a 3-month ascending triangle pattern. Last week the price broke above the upper boundary of the triangle. It is bullish with an upside price target projected at 38700.

 


 
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 has been reached. Currently is it in a consolidation.

 

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 2.5-Month Trading Range

 

The 30-year U.S. treasury bond index is forming a 2.5-month trading range between 144 and 146.5. It is neutral before the price breaks out of the range.

 


 
US Dollar Forming 10.5-Month Rising Wedge Pattern

 

The U.S. dollar index is forming a 10.5-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 3-Month Rising Wedge Pattern

 

The crude oil index is forming a 3-month rising wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
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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