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09/29/2019 – Market Update

September 30, 2019 Leave a comment Go to comments

 

Watch Out for Market Volatility

 

The stock market started a short-term downward wave last week. As the market momentum went into the negative territory, readings of our Broad Market Instability index started to rise. The S&P 500 index is consolidating inside an ascending triangle pattern and waiting for a breakout. Gold and the 30-year US treasury bond still hold mid-term uptrend. The broad stock market is projected to be in a short-term bearish time-window until 10/9/2019.

 
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Broad Market in Short-Term Bearish Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 24 on Friday 9/27/2019 (up from 8 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is slightly above 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 bearish time-window until 10/9/2019.

 

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: downward
Date of Next Cycle Low: 10/9/2019
Broad Market Instability Index (BIX): 24, below the panic threshold (bullish)
Momentum Indicator: slightly negative (neutral)

 

 
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, Utilities, and Precious Metals. Underperforming sectors are Oil Equipment, Biotech, 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 is forming a 4-month ascending 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 Broke above 2-Month Descending Triangle Pattern


 

The India Bombay Stock Exchange 30 Sensex index formed a 2-month descending triangle pattern. The price has recently broken above the upper boundary of the triangle. It is bullish with an upside price target projected at 38600. This price target was reached last week.

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index is forming a 5-month descending triangle pattern. It is neutral before the price breaks out from the triangle.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 8-month descending broadening wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
US Treasury Bond Forming 6-Month Ascending Broadening Wedge pattern


 

The 30-year U.S. treasury bond index is forming a 6-month ascending broadening wedge pattern. It is neutral before price breaks out from the wedge.

 


 
US Dollar Broke above 4-Week Symmetrical Triangle Pattern


 

The U.S. dollar index formed a 4-week symmetrical triangle pattern. The price broke above the upper boundary of the triangle. It is bullish with an upside price target projected at 99.3.

 


 
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 4-Week Descending Triangle Pattern


 

The silver index is forming a 4-week descending triangle pattern. It is neutral before the price breaks out from the triangle.

 

 
Crude Oil Forming 2-Month Ascending Broadening Wedge Pattern


 

The crude oil index is forming a 2-month ascending broadening 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 US treasury bond is outperforming and crude oil is underperforming.

 

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