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05/09/2021 – Market Update

May 10, 2021 Leave a comment

 

Stock Market in a High Wave Mode

 

The stock market was in a high wave mode with a range over 1% in both downside and upside and moved nowhere last week. Oil Equipment, Energy, and Banks ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index is still in a 3-month rising wedge pattern. Both the 30-year US treasury bond and crude oil continue in their 2-month horizontal trading ranges. The US dollar became bearish after a breakdown last week, and gold turned bullish to form a rising wedge. The broad stock market is projected to be in a short-term bullish time-window until 5/24/2021.

 
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Broad Market to be in Short-Term Bullish Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 12 on Friday 5/7/2021 (unchange from 12 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 5/24/2021.

 

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: 5/24/2021
Broad Market Instability Index (BIX): 12, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 

 
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 Banks. Underperforming sectors are Biotech, Internet, and Precious Metals.

 

 

 
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 3-month rising 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 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. The price breached the lower boundary last week. It is bearish with a downside price target projected at 3350.

 

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 Broke below 4-Month Ascending Broadening Wedge Pattern


 

The U.S. dollar index formed a 4-month ascending 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 89.25.

 


 
Gold in 2-Month Rising Wedge Pattern


 

The gold index is forming a 2-month rising wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.

 

 
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.