05/02/2021 – Market Update
Sideways Market
The stock market were in sideways last week. Energy, Oil Equipment, and Banks ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index is testing the lower boundary of a short-term rising wedge pattern for a potential breakdown. Both the 30-year US treasury bond and crude oil are in 2-month horizontal trading ranges. The US dollar rebounded from a support and gold breached to the downside. The broad stock market is projected to be in a short-term bearish time-window until 5/7/2021.
Table of Contents
- Broad Market to be in Short-Term Bearish Time-Window
- Sector Performance Ranking with Energy Leading
- S&P 500 Index Ending Primary Upward Wave X
- German DAX Index: Elliott Wave
- India Bombay Index in 3-Month Downtrend Channel Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 2-Month Horizontal Trading Range
- US Dollar Forming a 4-Month Ascending Broadening Wedge Pattern
- Gold Breached below 2-Month Rising Wedge Pattern
- Crude Oil in 2.5-Month Trading Range Pattern
- Asset Class Performance Ranking with Crude Oil Leading
Broad Market to be in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 12 on Friday 4/30/2021 (up from 9 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 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 5/7/2021.
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: peak
Date of Next Cycle Low: 5/7/2021
Broad Market Instability Index (BIX): 12, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)
Sector Performance Ranking with Energy 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 Energy, Oil Equipment, and Banks. Underperforming sectors are Precious Metals, Pharmaceuticals, and Biotech.
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 formed a 2-month rising wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge. Currently the price is testing the lower boundary.
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 3-Month Downtrend Channel Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 3-month downtrend channel pattern. It is bearish as long as the price is below the upper boundary of the channel.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 2-month ascending triangle pattern. It is neutral before the price breaks out from the triangle.
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 2-Month Horizontal Trading Range
The 30-year U.S. treasury bond index is forming a 2-month horizontal trading range between 154 and 158. It is neutral before the price breaks out from the range.
US Dollar Forming a 4-Month Ascending Broadening Wedge Pattern
US Dollar Forming a 4-Month Ascending Broadening Wedge Pattern
The U.S. dollar 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.
Gold Breached below 2-Month Rising Wedge Pattern
The gold index formed a 2-month rising wedge pattern. The price has breached the lower boundary of the wedge. It is bearish with a downside price target projected at 1680.
Silver in 9-Month Trading Range Pattern
The silver index is forming a 9-month horizontal trading range pattern. It is neutral before the price breaks out from the range.
Crude Oil in 2.5-Month Trading Range Pattern
The crude oil index is forming a 2.5-month horizontal trading range pattern. It is neutral before the price breaks out from the range.
Asset Class Performance Ranking with Crude 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 crude oil is outperforming and US treasury bond is underperforming.
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