Home > News > 04/19/2020 – Market Update

04/19/2020 – Market Update

 

Bearish Rising Wedge Alert

 

The stock market drifted higher last week, and the S&P 500 index is now up about 30% from its COVID-19 crisis sell-off low. Biotech, precious metals, and healthcare sectors ranked as the top three sectors with mostly strong technical strengths. Bearish rising wedge formation has appeared on the charts of the S&P 500 index, gold, and silver. Beware of any rising wedge breakdown that may resume price decline. Crude oil currently is neutral with prices traded in a horizontal range between 20 and 28. The broad stock market is projected to be in a short-term bearish time-window until 5/11/2020.

 
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Broad Market is about to Turn in Short-Term Bearish Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 1 on Friday 4/17/2020 (up from 0 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is right 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 bearish time-window until 5/11/2020.

 

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 Low: 5/11/2020
Broad Market Instability Index (BIX): 1, 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, Precious Metals, 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 30%. Once the bounce completes, the price will resume declining with downward wave c.

 

The S&P 500 index on daily chart is forming a 4-week rising wedge pattern corresponding to short-term upward wave b. Now it is at the bounce high, and a postbounce decline with downward wave c will be the next. If the price breaks below the lower boundary of the wedge, it would become bearish with the first downside price target projected at 2580 and the second price target at 2250.

 


 
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 waves a and b have been developed, and downward wave c will be the next.

 


 
India Bombay Index Forming 4-Week Rising Wedge Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 4-week rising wedge pattern. It is neutral before the price breaks out from the wedge. If the price breaks below the lower boundary of the wedge, it would become bearish with the first downside price target projected at 28200 and the second price target at 26000.

 


 
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 stretched sharply in both directions about 4.5% around a pivot level of 99.5. It is neutral as the price converges to the pivot level.

 


 
Gold Broke below 4-week Rising Wedge Pattern


 

The gold index formed a 4-week rising wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish with the first downside price target projected at 1610 and the second price target at 1480.

 

 
Silver Broke below 4-week Rising Wedge Pattern


 

The silver index formed a 4-week rising wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish with the first downside price target projected at 14 and the second price target at 12.

 

 
Crude Oil Forming 5-Week Horizontal Trading Range Pattern


 

The crude oil index is forming a 5-week horizontal trading range pattern between 20 and 28. It is neutral before the price breaks out from the range.

 


 
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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