05/17/2020 – Market Update
Strengthening Gold and Silver after Triangle Breakouts
Gold and silver had upward breakouts from their multi-week triangle patterns last week. Gold will challenge 7-year high soon. The US dollar and US 30-year treasury bond are near breakout from symmetrical triangle patterns. The S&P 500 index is neutral with treading in sideways. Precious metals, biotech, and internet sectors ranked as the top three sectors with mostly strong technical strengths. Crude oil is breaking the upper resistance level 28 for a bullish potential. The broad stock market is projected to be in a short-term neutral time-window until 6/1/2020.
Table of Contents
- Broad Market is in Short-Term Neutral 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 Ascending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Forming 7-Week Symmetrical Triangle Pattern
- US Dollar in 7-Week Symmetrical Triangle Pattern
- Gold Broke above 5-week Descending Triangle Pattern
- Crude Oil Broke above 2-month Descending Broadening Triangle Pattern
- Asset Class Performance Ranking with US Treasury Bond Leading
Broad Market is in Short-Term Neutral Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 4 on Friday 5/15/2020 (up from 3 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 negative. Based on the forecast of the Leading Wave Index (LWX), the broad stock market is projected to be in a short-term neutral time-window until 6/1/2020.
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 High: 6/11/2020
Broad Market Instability Index (BIX): 4, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)
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 Real Estate.
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. Waves a and b have been developed, and downward wave c will be the next.
The S&P 500 index on daily chart is forming a 6-week ascending broadening wedge pattern. It is neutral before the price breaks out from the wedge.
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 Ascending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 6-week ascending broadening wedge pattern. It is neutral before the price breaks out from the wedge.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 8-week rising wedge pattern. It is neutral before the price breaks out from the wedge.
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 7-Week Symmetrical Triangle Pattern
The 30-year U.S. treasury bond index is forming a 7-week symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.
US Dollar in 7-Week Symmetrical Triangle Pattern
The U.S. dollar index is forming a 7-week symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.
Gold Broke above 5-week Descending Triangle Pattern
The gold index formed a 5-week descending triangle pattern. The price broke above the upper boundary of the triangle last week. It is bullish with an upside price target projected at 1785.
Silver Broke above 5-week Symmetrical Triangle Pattern
The silver index formed a 5-week symmetrical triangle pattern. The price broke above the upper boundary of the triangle last week. It is bullish with an upside price target projected at 18.5.
Crude Oil Broke above 2-month Descending Broadening Triangle Pattern
The crude oil index formed a 2-month descending broadening triangle pattern. The price broke above the upper boundary of the triangle. It is bullish with an upside price target projected at 40.
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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