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06/07/2020 – Market Update

June 8, 2020 Leave a comment Go to comments

 

Stocks Bullish before Fed Meeting Week

 

The S&P 500 index had an upward breakout from a multi-week ascending triangle pattern last Friday on surprisingly strong jobs report. This significantly changed the long term perspective on the S&P 500 index with upgrading to upward primary wave X from flat primary wave Y. Internet, semiconductors, and home construction sectors ranked as the top three sectors with mostly strong technical strengths. Both the US dollar and US 30-year treasury bond have been bearish after they broke below their symmetrical triangle patterns. Crude oil continued rally but it is forming a bearish rising now. The broad stock market is projected to be in a short-term bullish time-window until 6/10/2020.

 
Table of Contents

 

 

Broad Market is in Short-Term Bullish Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 0 on Friday 6/5/2020 (down 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 positive. Based on the forecast of the Leading Wave Index (LWX), the broad stock market is projected to be in a short-term bullish time-window until 6/10/2020.

 

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: upward
Date of Next Cycle High: 6/10/2020
Broad Market Instability Index (BIX): 0, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 

 
Sector Performance Ranking with Internet 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 Internet, Semiconductors, and Home Construction. Underperforming sectors are Oil Equipment, Energy, and Utilities.

 

 

 
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 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. Based on recent price movement, intermediate downward wave (Y) should have finished in 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 upward intermediate wave (a) of the (a)–(b)–(c) three-wave sequence. Downward intermediate wave (b) will be the next.

 

The S&P 500 index on daily chart formed a 8-week ascending broadening wedge pattern. The price broke above the upper boundary of the wedge last week. It is bullish with an upside price target projected at 3400.

 


 
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. Downward intermediate wave (Y) ended in March, and upward primary wave [X] started. Primary upward wave [X] is going to have intermediate (a)–(b)–(c) three-wave sequence. Currently it is in upward intermediate wave (a) of the (a)–(b)–(c) three-wave sequence. Downward intermediate wave (b) 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 has broken above the upper boundary of the triangle. It is bullish with an upside price target projected at 34000. This price target was reached last week.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index formed a 2.5-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 Broke below 9-Week Symmetrical Triangle Pattern

 

The 30-year U.S. treasury bond index formed a 9-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 173.5. This price target was quickly reached last week.

 


 
US Dollar Broke Below 8-Week Symmetrical Triangle Pattern

 

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

 


 
Gold in 9-week horizontal trading range

 

The gold index is forming a 9-week horizontal trading range between 1680 and 1780. It is neutral before the price breaks out from the range.

 

 
Silver 10-Week Ascending Broadening Wedge Pattern

 

The silver index is forming a 10-week ascending broadening wedge pattern. It is neutral before the price breaks out from the wedge.

 

 
Crude Oil in 7-Week Rising Wedge Pattern

 

The crude oil index is forming a 7-week rising wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
Asset Class Performance Ranking with Equity 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 equity is outperforming and Oil is underperforming.

 

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