Home > News > 04/12/2020 – Market Update

04/12/2020 – Market Update

 

Stock Market Extended Bounce

 

The general stock market continued its strong rally last week, and the S&P 500 index is now up about 27% from its COVID-19 crisis sell-off low. Also, gold and silver prices had bullish breakouts on safe-haven demand. Precious metals, biotech, and healthcare sectors ranked as the top three sectors with mostly strong technical strengths. The US dollar, 30-year US treasury bond, and crude oil pulled back from their previous week rally. The S&P 500 index is in a process of a short-term a–b–c three-wave sequence, and now it is at the bounce high of short-term upward wave b. A postbounce decline with downward wave c will be the next. 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 0 on Thursday 4/9/2020 (down from 13 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 4/13/2020.

 

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: peak
Date of Next Cycle High: 4/13/2020
Broad Market Instability Index (BIX): 0, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 

 
Sector Performance Ranking with Precious Metals 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 Precious Metals, Biotech, 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. Currently it is in intermediate downward wave (Y) having a short-term abc wave sequence. After a 30% drop in downward wave a, upward wave b rose about 27% that is likely to be a dead-cat bounce. Once the bounce completes, the price will resume declining with downward wave c.

 

The S&P 500 index on daily chart is forming a dead-cat bounce pattern with intermediate downward wave (Y) going to have a short-term abc three-wave sequence. After a 30% drop in downward wave a, upward wave b rose about 27%. Now it is at the bounce high, and a postbounce decline with downward wave c will be the next.

 


 
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 has an intermediate (W)(X)(Y) three-wave sequence progressively to the downside. Now it is in downward intermediate wave (Y) going to have a short-term abc three-wave sequence. So far downward short-term Downward short-term wave c will be the next.

 


 
India Bombay Index Forming 4-Week Ascending Triangle Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 4-week ascending 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 11-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 3-Month Ascending Broadening Triangle Pattern


 

The 30-year U.S. treasury bond index formed a 3-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


 

The U.S. dollar index recently has formed a high wave pattern with the price stretched sharply in both directions about 4.5% 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 Broke above 6-week Descending Broadening Wedge pattern


 

The silver index formed a 6-week descending broadening wedge pattern. The price broke above the upper boundary of the wedge last week. It is 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. The price has recently 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.

 

  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s