Home > News > 06/30/2019 – Market Update

06/30/2019 – Market Update

 

Stay Cautious at Record Highs

 

The stock market pulled back from record highs and became choppy last week. The market currently is very sensitive about news on US-China trade talks, and any quick price move or large daily percentage change of the market may trigger volatility. We should stay cautious with a potential bull trap in play. The broad stock market is projected to be in a short-term bearish time-window until 7/12/2019.

 
Table of Contents


 

 

Broad Market is about to be in Short-Term Bearish Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 2 on Friday 6/28/2019 (down from 8 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 bearish time-window until 7/12/2019 (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: peak
Date of Next Cycle Low: 7/12/2019
Broad Market Instability Index (BIX): 2, 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, Semiconductors, and Industrials. Underperforming sectors are Oil Equipment, Pharmaceuticals, and Energy.

 

 

 
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] ended 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 wave [W] is going to have an intermediate (W)(X)(Y) three-wave sequence progressively to the downside. So far intermediate waves (W) and (X) have developed. Recently downward intermediate wave (Y) has started, and it will have a sub-wave a-b-c sequence. Now it is in upward sub-wave b. Downward sub-wave c will be the next.

 

The S&P 500 index on daily chart below is forming a 5-month ascending broadening right-triangle pattern. It is neutral before the price breaks out from the triangle,

 


 
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 in downward intermediate wave (Y).

 


 
India Bombay Index Forming 3-Month Rising Wedge Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 3-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 2-month broadening triangle pattern. It is neutral before the price breaks out from the triangle.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 21-month descending broadening wedge pattern. It is neutral before the price breaks out from the triangle. Please note there is a partial decline formed in June. This partial decline inside the descending broadening wedge pattern is a bullish sign indicating the price is likely to break above the upper boundary of the wedge.

 


 
US Treasury Bond Forming 5-Month Ascending Broadening Wedge


 

The 30-year U.S. treasury bond index is forming a 5-month ascending broadening wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
US Dollar Broke below 13-Month Rising Wedge Pattern


 

The U.S. dollar index formed a 13-month rising wedge pattern. The price broke below the lower boundary of the wedge. It is bearish with a downside price target projected at 94.5.

 


 
Gold Broke above 3.5-Year Ascending Triangle Pattern


 

The gold index formed a 3.5-year ascending triangle pattern on the weekly chart. The price has recently broken above the upper boundary of the triangle. It is bullish with an upside price target projected at 1570.

 

 
Silver Broke above 5-Month Falling Wedge Pattern


 

The silver index formed a 5-month falling wedge pattern. The price has recently broken above the upper boundary of the wedge. It is bullish with an upside price target projected at 15.6.

 

 
Crude Oil Forming 2-Month Descending Broadening Wedge Pattern


 

The crude oil index is forming a 2-month descending broadening wedge pattern. It is neutral before the price breaks out from the pattern.

 


 
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 the US dollar is underperforming.

 

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