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08/29/2021 – Market Update

August 30, 2021 Leave a comment

 

Rising Wedge in S&P 500

 

The S&P 500 index extended its multi-month rising wedge pattern which can be both a continuation and reversal pattern. Technology, Real Estate, and Home Construction ranked as the top three sectors with mostly strong technical strengths. The 30-year U.S. treasury bond index was still bullish with an ascending broadening wedge pattern. The broad stock market is projected to be in a short-term neutral time-window until 9/2/2021.

 
Table of Contents

 

 

Broad Market in Short-Term Neutral Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 8 on Friday 8/27/2021 (down from 83 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 neutral time-window until 9/2/2021.

 

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: upward
Date of Next Cycle High: 9/8/2021
Broad Market Instability Index (BIX): 8, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 

 
Sector Performance Ranking with Technology 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 Technology, Real Estate, and Home Construction. Underperforming sectors are Precious Metals, Oil Equipment, and Energy.

 

 

 
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 5-month rising wedge pattern. It is bullish as long as the price is above the lower boundary of the wedge. If the price breaks below the lower boundary, it would turn bearish with a downside price target projected at 4075.

 


 
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 4.5-Month Uptrend Channel Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 4.5-month uptrend channel pattern. It is bullish as long as the price stays above the lower boundary of the channel.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index is forming a 3-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 1-year ascending broadening wedge pattern. It is neutral before the price breaks out from the wedge.

 


 
US Treasury Bond in 3.5-Month Ascending Broadening Wedge Pattern

 

The 30-year U.S. treasury bond index is forming a 3.5-month ascending broadening wedge pattern. It is bullish as long as the price is above the lower boundary of the wedge.

 

 
US Dollar in 2.5-Month Ascending Broadening Triangle pattern

 

The U.S. dollar index is forming a 2.5-month ascending broadening triangle pattern. It is bullish as long as the price stays above the lower boundary of the triangle.

 



 
Gold in 2.5-Month Descending Broadening Triangle Pattern

 

The gold index is forming is forming a 2.5-month descending broadening triangle pattern. It is bearish before the price breaks above the upper boundary of the triangle.

 

 
Silver in 3-Month Downtrend Channel Pattern

 

The silver index is forming a 3-month downtrend channel pattern. It is bearish before the price breaks above the upper boundary of the channel.

 

 
Crude Oil in 2.5-Month Descending Broadening Wedge Pattern

 

The crude oil index formed a 2.5-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.

 


 
Asset Class Performance Ranking with Equity 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 equity is outperforming and the US dollar is underperforming.

 

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