07/26/2020 – Market Update
Gold Surged to Record High
Gold had a big breakout from its 4-month rising wedge pattern and the US dollar extended its bear run last week as spiraling tensions raised after US and China forced consulates to close. The momentum of stocks weakened and the market started pullback. Precious metals, home construction, and internet sectors ranked as the top three sectors with mostly strong technical strengths. The US 30-year treasury bond is near an upward breakout from a symmetrical triangle pattern. The broad stock market is projected to be in a short-term bearish time-window until 8/10/2020.
Table of Contents
- Broad Market is in Short-Term Bearish Time-Window
- Sector Performance Ranking with Precious Metals Leading
- S&P 500 Index in Primary Upward Wave X
- German DAX Index: Elliott Wave
- India Bombay Index in 2.5-Month Rising Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 4-Month Symmetrical Triangle Pattern
- US Dollar in 4-month falling wedge Pattern
- Gold in 4-Month Rising Wedge Pattern
- Crude Oil in 2-Month Rising Wedge Pattern
- Asset Class Performance Ranking with Gold Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 5 on Friday 7/24/2020 (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 slightly 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 8/10/2020.
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: downward
Date of Next Cycle Low: 8/10/2020
Broad Market Instability Index (BIX): 5, below the panic threshold (bullish)
Momentum Indicator: slightly negative (neutral)
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, Home Construction, and Internet. Underperforming sectors are Oil Equipment, Energy, and Real Estate.
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-month rising 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 Rising Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 2.5-month rising wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index formed a 3-month uptrend channel. The price broke above the upper boundary of the channel, and fast rising prices reached the 4th parallel line of the channel. The price has broken below the 3rd parallel line, and now is testing the 2nd parallel line. This is most likely to be a bump-and-run reversal top pattern, and it is bearish.
In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 1.5-year symmetrical triangle pattern. The price has broken above the upper boundary of the triangle with an upside price target projected at 3425. This price target has been reached. Now it is in a retracement.
US Treasury Bond in 4-Month Symmetrical Triangle Pattern
The 30-year U.S. treasury bond index is forming a 4-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.
US Dollar in 4-month falling wedge Pattern
The U.S. dollar index is forming a 4-month falling wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
Gold Broke above 4-Month Rising Wedge Pattern
The gold index formed a 4-month rising wedge pattern. The price broke above the upper boundary of the wedge last week. It is bullish with an upside price target projected at 2070.
Silver Broke above 4-Month Uptrend Channel Pattern
The silver index formed a 4-month uptrend channel. The price broke above the upper boundary of the channel last week. It is bullish as long as the price stays above the 1st parallel line.
Crude Oil in 2-Month Rising Wedge Pattern
The crude oil index is forming a 2-month rising wedge pattern. It is neutral before the price break out from the wedge.
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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