Last week the US Fed had the first rate cut since 2008, and the 30-year US treasury bond jumped to 2-year high. As money rushed into the bond market, the stock market declined sharply. Readings of our Broad Market Instability Index surged above the panic threshold. The S&P 500 index got into an intermediate downward wave. The broad stock market is projected to be in a short-term bearish time-window until 8/15/2019.

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 121 on Friday 8/2/2019 (up from 34 the previous week) which is above the panic threshold level of 42 and indicates a bearish market. The Wilshire 5000 index is slightly 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 8/15/2019.

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:

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, Home Construction, and Semiconductors. Underperforming sectors are Oil Equipment, Energy, and Pharmaceuticals.

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. Now it is in downward intermediate wave (Y) which will have a sub-wave a-b-c sequence.

The S&P 500 index on daily chart below is forming a 7-month rising wedge pattern with a sub-wave a-b-c sequence of intermediate wave (X). It is neutral before the price breaks out from the wedge. Now the price approaches the lower boundary of the wedge. If the price breaks below the lower boundary, a downside price target would be projected at 2825.

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).

The India Bombay Stock Exchange 30 Sensex index formed a 3-month rising wedge pattern. The price recently has broken below the lower boundary. It is bearish with a downside price target would be projected at 37000. This price target was reached last week.

The Shanghai Stock Exchange Composite index formed a 3-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.

The 30-year U.S. treasury bond index is forming a 4-month uptrend channel pattern. It is bullish as long as the price stays above the lower boundary of the channel.

The U.S. dollar index formed a 2-month descending broadening wedge pattern. The price has recently broken above the upper boundary of the wedge. It is bullish with an upside price target projected at 98.1. This price target was reached last week.

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, as long as the price stays above the upper boundary of the triangle.

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

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

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.