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06/28/2020 – Market Update

June 29, 2020 Leave a comment

 

Stock Market Momentum in Negative Territory

 

The stock market pulled back last week as the market momentum weakened into the negative territory. Precious metals, internet, and technology sectors ranked as the top three sectors with mostly strong technical strengths. Both the US 30-year treasury bond and gold reached the upper boundary of their short-term chart patterns for potential breakouts. The US dollar is bearish in a falling wedge pattern while crude oil is bullish in a rising wedge pattern. The broad stock market is projected to be in a short-term neutral time-window until 7/7/2020.

 
Table of Contents

 

 

Broad Market in Short-Term Neutral Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 26 on Friday 6/26/2020 (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 above 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 7/7/2020.

 

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: valley
Date of Next Cycle High: 7/24/2020
Broad Market Instability Index (BIX): 26, 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, Internet, and Technology. Underperforming sectors are Oil Equipment, Energy, and Banks.

 

 

 
S&P 500 Index in Primary Upward Wave X

 

As shown in the weekly chart below, since October of 2018, the SPX has been in a primary corrective wave [W]–[X]–[Y] sequence. Primary flat wave [W] ended late March, and primary upward wave [X] has started. Primary upward wave [X] is going to have intermediate (a)–(b)–(c) three-wave sequence. Currently it is in downward intermediate wave (b) of the (a)–(b)–(c) three-wave sequence. Upward intermediate wave (c) will be the next.

 

The S&P 500 index on daily chart is forming a 2.5-month 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 March the German DAX index has been in primary upward wave [X] which will have an intermediate (a)–(b)–(c) three-wave sequence. Currently it is in downward intermediate wave (b). Upward intermediate wave (c) will be the next.

 


 
India Bombay Index in 2.5-Month Ascending Triangle Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 2.5-month 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 formed a 3-month uptrend channel. It is bullish as long as the price stays above the lower boundary of the channel.

 

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 in 3.5-Month Symmetrical Triangle Pattern

 

The 30-year U.S. treasury bond index is forming a 3.5-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle. The price is testing the upper boundary of the triangle. If it breaks out upward, an upside price target would be projected at 184.

 


 
US Dollar in 3-month falling wedge Pattern

 

The U.S. dollar index is forming a 3-month falling wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.

 


 
Gold in 2.5-month horizontal trading range

 

The gold index is forming a 2.5-month horizontal trading range between 1680 and 1780. It is neutral before the price breaks out from the range. The price is testing the upper horizontal boundary of the range. If it breaks out upward, an upside price target would be projected at 1845.

 

 
Silver 2.5-month Ascending Broadening Wedge Pattern

 

The silver index is forming a 2.5-month ascending broadening wedge pattern. It is neutral before the price breaks out from the wedge.

 

 
Crude Oil in 6-Week Rising Wedge Pattern

 

The crude oil index is forming a 6-week rising wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
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.