04/11/2021 – Market Update
Extreme Low Stock Volatility with Excessive Optimism
The stock market extended gain last week with positive momentum and very low volatility. Semiconductors, Energy, and Oil Equipment ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index is forming a short-term ascending broadening wedge pattern, and the price reached the upper boundary of the wedge. The 30-year US treasury is forming a bottom reversal process. The broad stock market is projected to be in a short-term bullish time-window until 4/13/2021.
Table of Contents
- Broad Market in Short-Term Bullish 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 Index in 2-Month Falling Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 6-Month Bump-and-Run Pattern
- US Dollar Forming a 3-Month Ascending Broadening Wedge Pattern
- Gold in 6-Week Trading Range Pattern
- Crude Oil in 5-Week Descending Triangle Pattern
- Asset Class Performance Ranking with Equity Leading
Broad Market in Short-Term Bullish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 3 on Friday 4/9/2021 (up from 2 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 bullish time-window until 4/13/2021.
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: upward
Date of Next Cycle High: 4/13/2021
Broad Market Instability Index (BIX): 3, 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, Energy, and Oil Equipment. Underperforming sectors are Precious Metals, Biotech, and Pharmaceuticals.
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 due to end, and primary downward wave [Y] will be the next. Primary downward wave [Y] is going to have intermediate (w)–(x)–(y) three-wave sequence.
The S&P 500 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.
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 2-Month Falling Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 2-month falling wedge pattern. It is bearish as long as the price is below the upper boundary of the wedge.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index formed a 4-month ascending broadening wedge pattern. The price breached the lower boundary of the wedge. It is bearish with a downside price target projected at 3225.
In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 1.5-year rising wedge pattern. The price broke below the lower boundary of the wedge. It is bearish with a downside price target projected at 3150.
US Treasury Bond in 6-Month Bump-and-Run Pattern
The 30-year U.S. treasury bond index formed a 6-month bump-and-run pattern. The price bounced from the third parallel line. It is in a bottom reversal process.
US Dollar Forming a 3-Month Ascending Broadening Wedge Pattern
The U.S. dollar index is forming a 3-month ascending broadening wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.
Gold in 6-Week Trading Range Pattern
The gold index formed a 6-week trading range between 1680 and 1760. It is neutral before the price breaks out from the range.
Silver in 8-Month Trading Range Pattern
The silver index is forming a 8-month horizontal trading range pattern. It is neutral before the price breaks out from the range.
Crude Oil in 5-Week Descending Triangle Pattern
The crude oil index is forming a 5-week descending triangle pattern. It is neutral before the price breaks out from the triangle.
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 US treasury bond is underperforming.
Comments (0)
Trackbacks (0)
Leave a comment
Trackback
