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12/08/2019 – Market Update

December 9, 2019 Leave a comment Go to comments

 

Stocks Rode a Wave into December

 

The stock market recovered from a quick pullback last week. Readings of our Broad Market Instability Index was extremely low and the market momentum turned positive. The S&P 500 index was still building a rising wedge pattern while the US dollar was in a horizontal trading range, and the US 30-year treasury bond, gold and silver continued forming falling wedge patterns. The broad stock market is projected to be in a short-term bullish time-window until 12/23/2019.

 
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 1 on Friday 12/6/2019 (down from 7 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 bullish time-window until 12/23/2019.

 

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: 12/23/2019
Broad Market Instability Index (BIX): 1, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 

 
Sector Performance Ranking with Semiconductors 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 Semiconductors, Biotech, and Home Construction. Underperforming sectors are Oil Equipment,
Internet, 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 October of last year, 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 upward intermediate wave (X) which has a sub-wave a-b-c-d-e sequence.

 

The S&P 500 index on daily chart is forming a 7-month rising wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
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 upward intermediate wave (X).

 


 
India Bombay Index Forming 8-Month Broadening Triangle Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 8-month broadening 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 is forming a 3-month falling 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 11-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.

 


 
US Treasury Bond Forming 4-Month Falling Wedge Pattern


 

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

 


 
US Dollar Forming 4-Month Trading Range


 

The U.S. dollar index is forming a 4-month horizontal trading range between 97 and 99. It is neutral before the price breaks out from the range.

 


 
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 broken above the upper boundary of the triangle. It is bullish with an upside price target projected at 1570.

 

 
Silver in Falling Wedge Pattern


 

The silver index formed a 3-month falling wedge pattern. It is neutral before the price breaks out from the wedge.

 

 
Crude Oil Forming 7-Month Descending Triangle Pattern


 

The crude oil index is forming a 7-month descending triangle pattern. It is neutral before the price breaks out from the wedge.

 


 
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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