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09/15/2019 – Market Update

September 16, 2019 Leave a comment Go to comments

 

All Eyes Will Be On The Fed Meeting This Week

 

The S&P 500 index extended its rally near record highs, and the price reached our price target 3010 last week. The US dollar breached the lower boundary of an ascending broadening wedge pattern, and it is bearish with a downside price target projected at 95.5. The price of the 30-year US treasury bond touches the lower boundary of an ascending broadening wedge, and the direction of next price movement relies heavily on economic projections of Fed meeting this week. The broad stock market is projected to be in a short-term neutral time-window until 9/17/2019, followed by a bearish time-window right after.

 
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 14 on Friday 9/13/2019 (up from 9 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 neutral time-window until 9/17/2019, followed by a bearish time-window right after.

 

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: 10/11/2019
Broad Market Instability Index (BIX): 14, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 

 
Sector Performance Ranking with Home Construction 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 Home Construction, Semiconductors, and Consumer Services. Underperforming sectors are Oil Equipment, Biotech, 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. 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 formed a 4-week trading range between 2840 and 2940. The price has recently broken above the upper boundary of the trading range. An upside price target was projected at 3010. This price target was reached last week.

 


 
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-Month Descending Triangle Pattern


 

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

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index formed a 2-month descending broadening wedge pattern. The price has broken above the upper boundary of the wedge. It is bullish with an upside price target projected at 3040.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 5-month falling wedge pattern. The price has broken above the upper boundary of the wedge. It is bullish with an upside price target projected at 3270

 


 
US Treasury Bond Forming 5-Month Ascending Broadening Wedge pattern


 

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

 


 
US Dollar below 2.5-Month Ascending Broadening Wedge Pattern


 

The U.S. dollar index formed a 2.5-month ascending broadening wedge pattern. The price breached the lower boundary of the wedge. It is bearish with a downside price target projected at 95.5.

 


 
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 Forming 2.5-Month Uptrend Channel


 

The silver index is forming a 2.5-month uptrend channel pattern. It is bullish as long as the price stays above the lower boundary of the channel.

 

 
Crude Oil Forming 4-Month Descending Triangle Pattern


 

The crude oil index is forming a 4-month descending triangle 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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