05/31/2021 – Market Update
Relatively Quiet Price Action For Stocks
The stock market drifted slightly higher with a very low volatility last week. Oil Equipment, Energy, and Banks ranked as the top three sectors with mostly strong technical strengths. Both the S&P 500 index and gold are in their short-term bullish chart patterns. The US dollar is very close to a bullish breakout point. Both the 30-year US treasury bond and crude oil are still remaining 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 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 Broke above 3-Month Downtrend Channel Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 3-Month Horizontal Trading Range
- US Dollar in 3-Month Falling Wedge Pattern
- Gold Broke above 2.5-Month Rising Wedge Pattern
- Crude Oil in 3-Month Trading Range Pattern
- Asset Class Performance Ranking with Crude Oil Leading
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 3 on Friday 5/28/2021 (down 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 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 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): 3, 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 Utilities, 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 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 Broke above 3-Month Downtrend Channel Pattern
The India Bombay Stock Exchange 30 Sensex index formed a 3-month downtrend channel pattern. The price has broken above 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 has broken above the upper boundary of the triangle. It is bullish with an upside price target projected at 3575. This price target has been quickly reached.
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 3-Month Horizontal Trading Range
The 30-year U.S. treasury bond index is forming a 3-month horizontal trading range between 154 and 158. It is neutral before the price breaks out from the range.
US Dollar in 3-Month Falling Wedge Pattern
The U.S. dollar index is forming a 3-month falling wedge pattern. It is bearish as long as the price stays below the upper boundary of the wedge. Now the price is testing the upper boundary of the wedge. If the price breaks out upward, it would become bullish with an upside price target projected at 92.4.
Gold Broke above 2.5-Month Rising Wedge Pattern
The gold index formed a 2.5-month rising wedge pattern. The price has broken above the upper boundary. It is bullish with an upside price target projected at 1940.
Silver in 2-Month Ascending Broadening Wedge 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 3-Month Trading Range Pattern
The crude oil index is forming a 3-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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