05/03/2020 – Market Update
Breached below Bearish Rising Wedge
The S&P 500 index turned short-term bearish last Friday with breaking below the lower boundary of a 6-week rising wedge pattern. The price likely resumes declining with downward wave c. Precious metals, biotech, and internet sectors ranked as the top three sectors with mostly strong technical strengths. Crude oil is forming a bullish falling wedge pattern and waiting for a breakout. The broad stock market is projected to be in a short-term bearish time-window until 5/18/2020.
Table of Contents
- Broad Market is in Short-Term Bearish Time-Window
- Sector Performance Ranking with Precious Metals Leading
- S&P 500 Index in Primary Corrective Wave W
- German DAX Index: Elliott Wave
- India Bombay Index Forming 6-Week Rising Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Forming 3.5-Month Ascending Broadening Triangle Pattern
- US Dollar Formed a High Wave Pattern
- Gold Forming 5-week Rising Wedge Pattern
- Crude Oil Forming 2-month Falling Wedge Pattern
- Asset Class Performance Ranking with US Treasury Bond Leading
Broad Market is in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 2 on Friday 5/1/2020 (down from 6 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 bearish time-window until 5/18/2020.
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: downward
Date of Next Cycle Low: 5/18/2020
Broad Market Instability Index (BIX): 2, 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 Internet. Underperforming sectors are Oil Equipment, Energy, and Financials.
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 a–b–c wave sequence. After a 30% drop in downward wave a, upward wave b advanced about 30%. Once the bounce completes, the price will resume declining with downward wave c.
The S&P 500 index on daily chart formed a 6-week rising wedge pattern corresponding to short-term upward wave b. Last Friday the price broke below the lower boundary of the wedge. It is bearish with a downside price target projected at 2660.
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 a–b–c three-wave sequence. So far waves a and b have been developed, and downward wave c will be the next.
India Bombay Index Forming 6-Week Rising Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 6-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 a downside price target projected at 29900.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 6-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 a downside price target projected at 2740.
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 3.5-Month Ascending Broadening Triangle Pattern
The 30-year U.S. treasury bond index formed a 3.5-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
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 Forming 5-week Rising Wedge Pattern
The gold index formed a 5-week rising wedge pattern. The price broke below the lower boundary of the wedge. It is bearish with a downside price target projected at 1610.
Silver Broke below 4-week Rising Wedge Pattern
The silver index formed a 4-week rising wedge pattern. The price has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 14.
Crude Oil Forming 2-month Falling Wedge Pattern
The crude oil index is forming a 2-month falling wedge pattern. The price is going to test the upper boundary of the wedge. If the price breaks above the upper boundary, it would become bullish with an upside price target projected at 44.
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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