Home > News > 06/14/2020 – Market Update

06/14/2020 – Market Update

 

Stocks Flipped Bearish after Fed Meeting

 

The stock market made a large bearish reversal last week on Fed’s cautious commentary about permanent economic damage and an extended period of high unemployment resulted from the pandemic. The S&P 500 index started intermediate correct wave to the downside sharply. Internet, technology, and precious metals sectors ranked as the top three sectors with mostly strong technical strengths. The US 30-year treasury bond is neutral in a symmetrical triangle pattern and gold is neutral too in a horizontal trading range while the US dollar is bearish in a falling wedge pattern. Crude oil turned bearish after the price broke below a rising wedge pattern last week. The broad stock market is projected to be in a short-term bearish time-window until 6/26/2020.

 
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Broad Market in Short-Term Bearish Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 2 on Friday 6/12/2020 (up from 0 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 bearish time-window until 6/26/2020.

 

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: 6/26/2020
Broad Market Instability Index (BIX): 2, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)

 

 
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, Technology, and Precious Metals. 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.

 


 
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 10-week horizontal trading range


 

The gold index is forming a 10-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 Broke below 7-Week Rising Wedge Pattern


 

The crude oil index formed a 7-week rising wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish with a downside price target projected at 30.

 


 
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.

 

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