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05/23/2021 – Market Update

May 24, 2021 Leave a comment

 

Indecisive Market

 

The stock market continued moving back-and-forth and directionless last week. Oil Equipment, Energy, and Banks ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index looks bullish within a 3-month uptrend channel pattern. Gold is bullish with its price breaking above the upper boundary of a 2.5-month rising wedge pattern while the US dollar has been weakening. Both the 30-year US treasury bond and crude oil are still in their short-term horizontal trading ranges. The broad stock market is projected to be in a short-term bullish time-window until 6/7/2021.

 
Table of Contents

 

 

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 9 on Friday 5/21/2021 (down from 11 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 slightly negative. 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 6/7/2021.

 

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: upward
Date of Next Cycle High: 6/7/2021
Broad Market Instability Index (BIX): 9, below the panic threshold (bullish)
Momentum Indicator: slightly negative (neutral)

 

 
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 Utilities.

 

 

 
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 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 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 Breached above 3-Month Downtrend Channel Pattern

 

The India Bombay Stock Exchange 30 Sensex index formed a 3-month downtrend channel pattern. The price breached the upper boundary of the channel. It is bullish with an upside price target projected at 52000.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index formed a 2.5-month ascending triangle pattern. The price is testing the upper boundary of the triangle. If the price stays above the upper boundary of the channel, it would be bullish with an upside price target projected at 3575.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 1.5-year uptrend channel pattern. It is bullish as long as the price stays above the lower boundary of the channel.

 


 
US Treasury Bond in 2.5-Month Horizontal Trading Range

 

The 30-year U.S. treasury bond index is forming a 2.5-month horizontal trading range between 154 and 158. It is neutral before the price breaks out from the range.

 


 
US Dollar in 2.5-Month Falling Wedge Pattern

 

The U.S. dollar index is forming a 2.5-month falling wedge pattern. It is bearish as long as the price stays below the upper boundary of the wedge.

 


 
Gold Broke above 2.5-Month Rising Wedge Pattern

 

The gold index formed a 2.5-month rising wedge pattern. The price broke above the upper boundary last week. It is bullish with an upside price target projected at 1940.

 

 
Silver in 9-Month Trading Range Pattern

 

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

 

 
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.