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08/18/2019 – Market Update

August 19, 2019 Leave a comment

 

Stock Market Recovering from 2-Month Low

 

The stock market started to rebound last Friday after it reached a 2-month low. The market volatility returned to normal as readings of our Broad Market Instability Index dropped back below the panic threshold level. The S&P 500 is forming a 2-week trading range between 2840 and 2940 before the next breakout. The 30-year US treasury bond and gold extended rally last week but they face a consolidation soon. The broad stock market is projected to be in a short-term bullish time-window until 9/6/2019.

 
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 30 on Friday 8/16/2019 (down from 143 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is below the 89-day exponential moving average, and the momentum is slightly negative. 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 9/6/2019.

 

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: 9/6/2019
Broad Market Instability Index (BIX): 30, below the panic threshold (bullish)
Momentum Indicator: slightly negative (neutral)

 

 
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, Real Estate, and Utilities. 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] 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. 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. Currently 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 2-week trading range between 2840 and 2940. It is neutral before the price breaks out from the range.

 


 
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 2.5-Month Falling Wedge Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 2.5-month falling 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 descending broadening wedge pattern. It is neutral before the price breaks out from the wedge.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 5-month falling wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
US Treasury Bond Forming 4-Month Ascending Broadening Wedge pattern


 

The 30-year U.S. treasury bond index is forming a 4-month ascending broadening wedge pattern. It is neutral before price breaks out from the wedge.

 


 
US Dollar Forming 2-Month Ascending Broadening Wedge Pattern


 

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

 


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

 

 
Silver Forming 3-Month Ascending Broadening Wedge Pattern


 

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

 

 
Crude Oil Forming 3.5-Month Descending Triangle Pattern


 

The crude oil index is forming a 3.5-month descending triangle 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.