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09/13/2020 – Market Update

September 14, 2020 Leave a comment Go to comments

 

Stocks in Volatile Trading

 

The stock market was volatile as negative momentum in stocks last week. Although readings of our Broad Market Instability index kept rising above the panic threshold level, the S&P 500 index still held in a 4-month uptrend channel. Home Construction, Precious Metals, and Internet sectors ranked as the top three sectors with mostly strong technical strengths. Gold maintained staying in a multi-month uptrend channel and the US 30-year treasury bond was neutral. The US dollar 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.

 
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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 93 on Friday 9/11/2020 (up from 53 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): 93, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)

 

 
Sector Performance Ranking with Home Construction 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 Home Construction, Precious Metals, and Internet. Underperforming sectors are Energy, Oil Equipment, 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 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 current pullback could be either a correction inside upward intermediate wave (a) or a start of downward intermediate wave (b).

 

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 Forming 4.5-Month Rising Wedge Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 4.5-month rising wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index is forming a 2.5-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 in 6-Month Ascending Triangle Pattern


 

The 30-year U.S. treasury bond index is forming a 6-month ascending triangle pattern. It is neutral before the price breaks out from the triangle.

 


 
US Dollar Forming 7-Week Descending Broadening Wedge Pattern


 

The U.S. dollar index is forming a 7-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 6-week Symmetrical Triangle Pattern


 

The silver index is forming a 6-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 has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 39.5. This price target was reached last week.

 


 
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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