02/28/2021 – Market Update
Stocks, Gold, and Treasury Bond Declined Concurrently
The US stock market declined sharply last week. The volatility increased as readings of our Broad Market Instability Index jumped up above the panic threshold level. The S&P 500 index breached the lower boundary of its 6-month rising wedge pattern, and sent a warning signal for a downward move. Oil Equipment, Energy, and Semiconductors ranked as the top three sectors with mostly strong technical strengths. The 30-year US treasury bond also moved sharply lower, and gold broke below the lower boundary of its 8-month descending triangle patter last week. Crude oil is still bullish in a 4-month uptrend channel. The broad stock market is projected to be in a short-term bearish time-window until 3/11/2021.
Table of Contents
- Broad Market in Short-Term Bearish Time-Window
- Sector Performance Ranking with Oil Equipment Leading
- S&P 500 Index Ending Primary Upward Wave X
- German DAX Index: Elliott Wave
- India Bombay in Index 5-month Ascending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 6-Month Descending Broadening Wedge Pattern
- US Dollar in 2-Month Trading Range Pattern
- Gold iBroke Below 8-Month Descending Triangle Pattern
- Crude Oil in 4-Month Uptrend Channel Pattern
- Asset Class Performance Ranking with Oil Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 56 on Friday 2/26/2021 (up from 10 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 3/11/2021.
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: 3/11/2021
Broad Market Instability Index (BIX): 56, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)
Sector Performance Ranking with Oil Equipment 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 Oil Equipment, Energy, and Semiconductors. Underperforming sectors are Precious Metals, Utilities, and Telecommunication.
S&P 500 Index Ending 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. After primary flat wave [W] ended late March of 2020, primary upward wave [X] started. Primary upward wave [X] has developed intermediate (a)–(b)–(c) three-wave sequence. Primary upward wave [X] is most likely ending, and primary downward wave [Y] is starting. Primary downward wave [Y] is going to have intermediate (w)–(x)–(y) three-wave sequence. Right now it is in a transition to the first intermediate downward wave (w) of primary wave [Y].
The S&P 500 index formed a 6-month rising wedge pattern. The price breached the lower boundary of the wedge. It is bearish as long as the price stays below the lower boundary of the wedge.
German DAX Index: Elliott Wave
In the following weekly chart, since early March of 2020 the German DAX index has been in primary upward wave [X] which developed an intermediate (a)–(b)–(c) three-wave sequence. Currently it is in a transition from primary upward wave [X] to primary downward wave [Y]. The next will be the first intermediate downward wave (w).
India Bombay Index in 5-month Ascending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 5-month ascending broadening 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-month ascending broadening wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.
In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 1.5-year rising wedge pattern. It is bullish as long as the price is above the lower boundary of the wedge.
US Treasury Bond in 6-Month Bump-and-Run Pattern
The 30-year U.S. treasury bond index is forming a 6-month bump-and-run pattern. The price declined below the second parallel line. It is bearish until the price cross above the second parallel line.
US Dollar in 2-Month Trading Range Pattern
The U.S. dollar index is forming a 2-month trading range pattern. It is neutral before the price breaks out from the range.
Gold Broke Below 8-Month Descending Triangle Pattern
The gold index formed a 8-month descending triangle pattern. The price broke below the lower boundary of the triangle last week. It is bearish with a downside price target projected at 1600.
Silver in 7-Month Trading Range Pattern
The silver index is forming a 7-month horizontal trading range pattern. It is neutral before the price breaks out from the range.
Crude Oil in 4-Month Uptrend Channe Pattern
The crude oil index is forming a 4-month uptrend channel pattern. It is bullish as long as the price stays above the lower boundary of the channel.
Asset Class Performance Ranking with Oil 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 oil is outperforming and gold is underperforming.
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