Archive

Archive for April 7, 2019

04/07/2019 – Market Update

April 7, 2019 Leave a comment

 

Stocks Approach a Critical Juncture

 

After the price sharply broke above the major resistance at the 2820 level last Monday, the S&P 500 index drifted up for the rest of the week. Also it is forming a bearish rising wedge pattern and waiting for a breakout. It will be a critical juncture for reversal or continuation on the price movement. If the price breaks downward from the wedge, a downward intermediate wave will start. The broad stock market is projected to be in a short-term bullish time-window until 4/15/2019.

 
Table of Contents


 

 

Broad Market in Short-Term Bullish Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 2 on Friday 4/5/2019 (down from 24 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 bullish time-window until 4/15/2019 (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: 4/15/2019
Broad Market Instability Index (BIX): 2, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 

 
Sector Performance Ranking with Semiconductors 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 Semiconductors, Real Estate, and Home Construction. Underperforming sectors are Oil Equipment, Energy, and Pharmaceuticals.

 

 

 
S&P 500 Index in Primary Downward Wave W


 

As shown in the weekly chart below, since early 2016 the SPX has been in primary impulse wave [5] which is the last upward wave of a multi-year primary five-wave sequence started from 2009. This fifth primary upward wave developed an intermediate (1)(2)(3)(4)(5) five-wave sequence. Both intermediate upward wave (5) and primary upward wave [5] should end in last October, and primary corrective wave [W][X][Y] sequence started right after.

Currently the SPX is in primary corrective wave [W] which is the first primary downward wave of the primary corrective wave [W][X][Y] sequence. In downward wave [W] of a bear market, the fundamental news is usually still positive. Most people see the drop as a correction in a still-active bull market.

This downward [W] wave is going to have an intermediate (W)(X)(Y) three-wave sequence progressively to the downside. So far intermediate (W) and (X) have developed. Now it is near the end of upward intermediate (X), and downward intermediate (Y) will be the next.

 

The S&P 500 index on daily chart below is forming a 3-month rising wedge pattern which corresponds to upward intermediate wave (X). It is neutral before the price breaks out from the wedge. If the price breaks out to the downside, downward intermediate wave (Y) will start.

 


 
German DAX Index: Elliott Wave


 

In the following weekly chart, since early 2018 the German DAX index has been in primary downward wave [W] which will have an intermediate (W)(X)(Y) three-wave sequence progressively to the downside. So far intermediate wave (W) and wave (X) have developed. Now it is near the end of upward intermediate wave (X), and downward intermediate wave (Y) will start.

 


 
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-week ascending triangle pattern. Last week the price broke above the upper boundary of the triangle with an upside price target projected at 3235. This price target has been reached.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 4-year falling wedge pattern. Recently the price has broken above 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 3-Month Ascending Broadening Wedge


 

The 30-year U.S. treasury bond index is forming a 3-month ascending broadening wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
US Dollar Forming 11-Month Rising Wedge Pattern


 

The U.S. dollar index is forming a 11-month rising wedge pattern. It is neutral before the price breaks out from the pattern.

 


 
Gold Forming 2-Month Triangle Pattern


 

The gold index is forming a 2-month triangle pattern. It is neutral before the price breaks out from the pattern.

 

 
Silver Forming 3-Month Falling Wedge Pattern


 

The silver index is forming a 3-month falling wedge pattern. It is neutral before the price breaks out from the pattern.

 

 
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 US Treasury Bond 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 treasury bond is outperforming and Crude Oil is underperforming.