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04/05/2020 – Market Update

April 6, 2020 Leave a comment

 

Crude Oil Forming Possible Reversal Bottom

 

The crude oil index is forming a potential Bump and Run Reversal Bottom pattern, and the price sharply broke above the bump trendline with a bullish reversal last week. The 30-year US treasury bond, US dollar, gold, and stocks were all short-term bullish. Biotech, healthcare, and pharmaceuticals sectors ranked as the top three sectors with most strong technical strengths. The S&P 500 index likely extends the current rebound into this coming week but a dead-cat bounce is still intact. The broad stock market is projected to be in a short-term bullish time-window until 4/13/2020.

 
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 13 on Friday 4/3/2020 (up from 2 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 4/13/2020.

 

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: 4/13/2020
Broad Market Instability Index (BIX): 13, below the panic threshold (bullish)
Momentum Indicator: slightly negative (neutral)

 

 
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, Healthcare, and Pharmaceuticals. Underperforming sectors are Oil Equipment, Home Construction, and Energy.

 

 

 
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 current rebound 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. The current rebound is likely 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. The current rebound is likely 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 2.5-Month Ascending Broadening Triangle Pattern

 

The 30-year U.S. treasury bond index formed a 2.5-month ascending broadening triangle pattern. It is bullish as long as the price stays above the lower boundary of the triangle.

 


 
US Dollar Formed a High Wave Pattern

 

During last 6 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 Forming 5-Month Ascending Triangle Pattern

 

The gold index is forming a 5-month ascending triangle pattern. It is bullish as long as the price stays above the lower boundary of the triangle.

 

 
Silver Forming 6-week Descending Broadening Wedge pattern

 

The silver index is forming a 6-week descending broadening wedge pattern. The price is testing the upper boundary of the wedge. If the price breaks above the upper boundary, the index would become bullish with an upside price target projected at 19.

 

 
Crude Oil Forming Potential Bump and Run Reversal Bottom Pattern

 

The crude oil index is forming a potential Bump and Run Reversal Bottom pattern. Since the index broke below the first downtrend channel, prices have declined sharply along a steep bump trendline as excessive speculation drove prices down. Last week the price broke above the bump trendline with a bullish reversal. The next upside price target is projected at 31 near the first parallel line.

 


 
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.