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05/31/2020 – Market Update

June 1, 2020 Leave a comment

 

Stocks Drifting Higher and US Dollar Weakening

 

The US dollar weakens after its price broke below a multi-week symmetrical triangle pattern. The S&P 500 index drifted higher in a 8-week ascending triangle pattern while gold was traded in a horizontal trading range. Precious metals, internet, and biotech sectors ranked as the top three sectors with mostly strong technical strengths. Crude oil is in a bullish broadening triangle bottom. The US 30-year treasury bond remained in a multi-week symmetrical triangle pattern without breakout. The broad stock market is projected to be in a short-term neutral time-window until 6/5/2020.

 
Table of Contents

 

 

Broad Market is in Short-Term Neutral Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 3 on Friday 5/29/2020 (up from 2 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 positive. 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 6/5/2020.

 

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: 6/25/2020
Broad Market Instability Index (BIX): 3, 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, Internet, and Biotech. 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. 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 8-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 Broke above 4-Week Descending Triangle Pattern

 

The India Bombay Stock Exchange 30 Sensex index formed a 4-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 34000.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index formed a 8-week rising wedge pattern. The price broke below the lower boundary of the wedge. It is bearish with a downside price target projected at 2800.

 

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 9-Week Symmetrical Triangle Pattern

 

The 30-year U.S. treasury bond index is forming a 9-week symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.

 


 
US Dollar Broke Below 8-Week Symmetrical Triangle Pattern

 

The U.S. dollar index formed a 8-week symmetrical triangle pattern. The price broke below the lower boundary of the triangle last week. It is bearish with a downside price target projected at 98.

 


 
Gold in 8-week horizontal trading range

 

The gold index is forming a 8-week horizontal trading range between 1680 and 1780. It is neutral before the price breaks out from the range.

 

 
Silver 9-Week Ascending Broadening Wedge Pattern

 

The silver index is forming a 9-week ascending broadening wedge pattern. It is neutral before the price breaks out from the wedge.

 

 
Crude Oil in 11-Week Broadening Triangle Pattern

 

The crude oil index is forming a 11-week broadening triangle bottom pattern. It is neutral before the price breaks out from the triangle.

 


 
Asset Class Performance Ranking with Gold 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 gold is outperforming and Oil is underperforming.