09/06/2020 – Market Update
Stock Market in Bearish Reversal
The S&P 500 index had a sharp bearish reversal from its all time high last week. Readings of our Broad Market Instability index started rising above the panic threshold level. Precious Metals, Internet, and Technology sectors ranked as the top three sectors with mostly strong technical strengths. Gold still maintained staying in a multi-month uptrend channel. The US 30-year treasury bond was bearish after the price broke below its 6-month ascending triangle. The US dollar also is bearish in a descending broadening wedge pattern. The broad stock market is projected to be in a short-term bearish time-window until 9/16/2020.
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 Broke below 4-Month Rising Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Broke below 6-Month Ascending Triangle Pattern
- US Dollar Forming 6-Week Descending Broadening Wedge Pattern
- Gold Forming 6-Month Uptrend Channel Pattern
- Crude Oil Broke below 3.5-Month Rising Wedge Pattern
- Asset Class Performance Ranking with Equity Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 53 on Friday 9/4/2020 (up from 12 the previous week) which is above the panic threshold level of 42 and indicates a bearish 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 9/16/2020.
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: 9/16/2020
Broad Market Instability Index (BIX): 53, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)
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 Technology. Underperforming sectors are Energy, Utilities, and Oil Equipment.
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. It has been 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 is forming a 4-month uptrend channel pattern. It is bullish as long as the price stays above the lower boundary of the channel.
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 still in upward intermediate wave (a).
India Bombay Index Broke below 4-Month Rising Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index formed a 4-month rising wedge pattern. The price breached the lower boundary of the wedge last week. It is bearish with a downside price target projected at 35800.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 2-month horizontal trading range between 3200 and 3450. It is neutral before the price breaks out from the range.
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 consolidation.
US Treasury Bond Broke below 6-Month Ascending Triangle Pattern
The 30-year U.S. treasury bond index formed a 6-month ascending triangle pattern. The price has broken below the lower boundary of the triangle. It is bearish with a downside price target projected at 172.
US Dollar Forming 6-Week Descending Broadening Wedge Pattern
The U.S. dollar index is forming a 6-week descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
Gold Forming 6-Month Uptrend Channel Pattern
The gold index is forming a 6-month uptrend channel pattern. It is bullish as long as the price stays above the lower boundary of the channel.
Silver Forming 5-week Symmetrical Triangle Pattern
The silver index is forming a 5-week symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.
Crude Oil Broke blow 3.5-Month Rising Wedge Pattern
The crude oil index formed a 3.5-month rising wedge pattern. The price broke below the lower boundary of the wedge. It is bearish with a downside price target projected at 39.5.
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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