12/06/2020 – Market Update
Stock Market in New All-Time High
The stock market continued drifting higher to a new all-time high last week. Semiconductors, Oil Equipment, and Consumer Goods sectors ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index is likely in its last intermediate upward wave before the next primary downward wave starts. The US dollar is very bearish with a breakdown happened last week. Both gold and the 30-year US treasury bond are bearish in their multi-month downtrend channels. The broad stock market is projected to be in a short-term neutral time-window until 12/11/2020.
Table of Contents
- Broad Market in Short-Term Neutral Time-Window
- Sector Performance Ranking with Semiconductors Leading
- S&P 500 Index in Primary Upward Wave X
- German DAX Index: Elliott Wave
- India Bombay Index in 4-Week Uptrend Channel Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 5-Month Downtrend Channel Pattern
- US Dollar Broke below 2-Month Descending Broadening Wedge Pattern
- Gold in 4-Month Downtrend Channel Pattern
- Crude Oil Broke above 2.5-Month symmetrical Triangle Pattern
- Asset Class Performance Ranking with Equity Leading
Broad Market in Short-Term Neutral Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 1 on Friday 12/4/2020 (down from 7 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 positive. Based on the forecast of the Leading Wave Index (LWX), the broad stock market is projected to be in a short-term neutral time-window until 12/11/2020.
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: upward
Date of Next Cycle High: 12/21/2020
Broad Market Instability Index (BIX): 1, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)
Sector Performance Ranking with Semiconductors 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 Semiconductors, Oil Equipment, and Consumer Goods. Underperforming sectors are Precious Metals, Utilities, 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 intermediate upward wave (c) which is the last intermediate upward wave before the next primary downward wave starts.
The S&P 500 index on daily chart is forming a 5-week 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 in intermediate upward wave (c).
India Bombay Index in 4-Week Uptrend Channel Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 4-week uptrend channel pattern. It is bullish as long as the price stays above the lower boundary of the channel.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 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 5-Month Downtrend Channel Pattern
The 30-year U.S. treasury bond index is forming a 5-month downtrend channel pattern. It is bearish before the price breaks above the upper boundary of the channel.
US Dollar Broke below 2-Month Descending Broadening Wedge Pattern
The U.S. dollar index formed a 2-month descending broadening wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish with a downside price target projected at 90.6. This price target has been quickly reached.
Gold in 4-Month Downtrend Channel Pattern
The gold index is forming a 4-month downtrend channel pattern. It is bearish as long as the price is below the upper boundary of the channel.
Silver in 4-Month Descending Triangle Pattern
The silver index is forming a 4-month descending triangle pattern. It is neutral before the price breaks out from the triangle.
Crude Oil Broke above 2.5-Month symmetrical Triangle Pattern
The crude oil index formed a 2.5-month symmetrical triangle pattern. The price has broken above the upper boundary. It is bullish with an upside price target projected at 48.
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 the US dollar is underperforming.
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