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06/13/2021 – Market Update

 

Stocks Hovered at Record Highs

 

The stock market slowly drifted up and made new highs again last week. Oil Equipment, Energy, and Real Estate ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index is still in a 4-month uptrend channel pattern. The 30-year US treasury bond turned bullish after its price had an upward breakout from a 3-month horizontal trading range. The US dollar is bullish with its upward breakout from a 3-month falling wedge pattern. Crude oil is also bullish with its upward breakout from a 3-month horizontal trading range. Fed meeting this week may have an influence on the markets. The broad stock market is projected to be in a short-term bearish time-window until 7/2/2021.

 
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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 7 on Friday 6/11/2021 (unchanged from 7 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 bearish time-window until 7/2/2021.

 

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: 7/2/2021
Broad Market Instability Index (BIX): 7, 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 Real Estate. Underperforming sectors are Utilities, Consumer Goods, 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 4-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 in 4-Month Ascending Triangle Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 4-month ascending triangle pattern. It is neutral before the price breaks out from the triangle.

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index is forming a 3-month ascending broadening wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.

 

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 Broke above 3-Month Horizontal Trading Range


 

The 30-year U.S. treasury bond index formed a 3-month horizontal trading range between 154 and 158. The price broke above the upper boundary of the range last week. It is bull with an upside price target project at 162.

 


 
US Dollar Broke above 3-Month Falling Wedge Pattern


 

The U.S. dollar index formed a 3-month falling wedge pattern. The price broke above the upper boundary of the wedge. It is bullish with an upside price target projected at 92.4

 


 
Gold in 3-Month Uptrend Channel Pattern


 

The gold 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.

 

 
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 Broke above 3-Month Trading Range Pattern


 

The crude oil index formed a 3.5-month horizontal trading range pattern. The price has broken above the upper boundary of the range. It is bullish with an upside price target projected at 72.

 


 
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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