08/02/2020 – Market Update
Gold Made a New Record High
Gold continued moving higher to another new record high last week as the US dollar was in fast falling. The stock market was flat with a very weak momentum. Precious metals, Internet, and Home Construction 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 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 3-Month Rising Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 4-Month Symmetrical Triangle Pattern
- US Dollar Broke Below 4-month falling wedge Pattern
- Gold Broke above 4-Month Rising Wedge Pattern
- Crude Oil in 2.5-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 29 on Friday 7/31/2020 (up from 5 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, Internet, and Home Construction. 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 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 3-Month Rising Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 3-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 is forming a 4-week descending triangle pattern. It is neutral before the price breaks out from the triangle.
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 4.5-Month Ascending Triangle Pattern
The 30-year U.S. treasury bond index is forming a 4.5-month ascending triangle pattern. It is neutral before the price breaks out from the triangle.
US Dollar Broke Below 4-month falling wedge Pattern
The U.S. dollar index formed a 4-month falling wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish with a downside price target projected at 92.
Gold Broke above 4-Month Rising Wedge Pattern
The gold index formed a 4-month rising wedge pattern. The price has broken above the upper boundary of the wedge. 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 has broken above the upper boundary of the channel. It is bullish as long as the price stays above the 1st parallel line.
Crude Oil in 2.5-Month Rising Wedge Pattern
The crude oil index is forming a 2.5-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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