Home > News > 03/29/2020 – Market Update

03/29/2020 – Market Update

 

Oversold Bounce

 

After a 30% plunge, the stock market bounced sharply last week. Readings of our Broad Market Instability Index calmed down below the panic threshold. Biotech, technology, and healthcare sectors ranked as the top three sectors with most strong technical strengths. The S&P 500 index rebounded about 16% from Monday’s low, but it is likely to be a short-lived recovery due to COVID-19 cases continue to soar and virus-related deaths are mounting. The US dollar pulled back sharply as a part of its recent high wave swings. Gold broke above the upper boundary of a short-term falling wedge pattern and had a quick advance. The 30-year US treasury bond index was in a consolidation, and crude oil was still very bearish in a downtrend. The broad stock market is projected to be in a short-term bullish time-window until 4/2/2020.

 
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 2 on Friday 3/27/2020 (down from 352 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 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 4/2/2020.

 

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: 4/2/2020
Broad Market Instability Index (BIX): 2, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 

 
Sector Performance Ranking with Biotech 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 Biotech, Technology, and Healthcare. Underperforming sectors are Oil Equipment, Energy, and Home Construction.

 

 

 
S&P 500 Index in Primary Corrective Wave W


 

As shown in the weekly chart below, since October of 2018, the SPX has been in primary flat wave [W] which is the first wave of the primary corrective wave [W][X][Y] sequence. This flat wave [W] has developed an intermediate expanded flat correction (W)(X)(Y) three-wave sequence. Now it is in intermediate downward wave (Y), and has expanded below intermediate downward wave (W). The powerful rebound last week is likely to be a short-lived recovery as a dead-cat-bounce .

 

The S&P 500 index on daily chart formed a 7-month ascending triangle pattern. The price has sharply broken below the lower boundary of the triangle. It is bearish with a downside price target projected at 2600. The price has quickly plunged far below this price target. Last week the index rebounded by 15% around, and it is like to be a dead-cat-bounce.

 


 
German DAX Index: Elliott Wave


 

In the following weekly chart, since early 2018 the German DAX index has been in primary flat 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 Broke Below 4-Month Broadening Triangle Pattern


 

The India Bombay Stock Exchange 30 Sensex index formed a 4-month broadening triangle pattern. The price has broke below the lower boundary of the triangle. It is bearish with a downside price target projected at 37500. The price has plunged far below this price target. Last week the index rebounded sharply, and it is like to be a dead-cat-bounce.

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index is forming a 10.5-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 is forming a 1-year downtrend channel pattern. It is bearish before the price breaks above the upper boundary of the channel.

 


 
US Treasury Bond Forming 16-Month Ascending Broadening Triangle Pattern


 

The 30-year U.S. treasury bond index formed a 16-month ascending broadening triangle pattern. The price has reached the upper boundary of the triangle, and now is in a consolidation.

 


 
US Dollar Formed a High Wave Pattern


 

During last 5 weeks, the U.S. dollar index was very volatile and formed a high wave pattern. The price went back and forth sharply about 4.5% in either direction around a pivot level of 99.5. It is neutral within this range.

 


 
Gold Broke above 4-Week Falling Wedge Pattern


 

The gold index formed a 4-week falling wedge pattern. The price broke above the upper boundary of the wedge last week. It is bullish with an upside price target projected at 1690. This price target was briefly touched last week.

 

 
Silver Forming 5-week Descending Broadening Wedge pattern


 

The silver index is forming a 5-week descending broadening wedge pattern. It is neutral before the price breaks above the upper boundary of the wedge.

 

 
Crude Oil in Downtrend Channel


 

The crude oil index formed a 2.5-month downtrend channel pattern. The price broke below the second parallel channel line last week, and it is bearish in the third downtrend channel.

 


 
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 Oil is underperforming.

 

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