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08/01/2021 – Market Update

August 2, 2021 Leave a comment

 

Flat Market

 

The stock market was flat with weak momentum last week. Real Estate, Technology, and Banks ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index was still in a multi-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 for the S&P 500 index. The 30-year U.S. treasury bond index was still bullish with an ascending broadening wedge. The broad stock market is projected to be in a short-term bullish time-window until 8/6/2021.

 
Table of Contents

 

 

Broad Market in Short-Term Bullish Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 38 on Friday 7/30/2021 (down from 58 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 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 8/6/2021.

 

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 High: 8/6/2021
Broad Market Instability Index (BIX): 38, below the panic threshold (bullish)
Momentum Indicator: slightly positive (neutral)

 

 
Sector Performance Ranking with Real Estate 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 Real Estate, Technology, and Banks. Underperforming sectors are Precious Metals, Oil Equipment, 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 4-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 2-Month Ascending Broadening Triangle Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 2-month ascending broadening 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 formed a 4.5-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 3290.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 1.5-year uptrend channel pattern. The price broke below the lower boundary of the channel last week. It is bearish with a downside price target projected at 3200.

 


 
US Treasury Bond in 2.5-Month Ascending Broadening Wedge Pattern

 

The 30-year U.S. treasury bond index is forming a 2.5-month ascending broadening wedge pattern. It is bull as long as the price is above the lower boundary of the wedge.

 


 
US Dollar Broke below 5-Week Rising Wedge Pattern

 

The U.S. dollar index formed a 5-week rising wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish with a downside price target at 91.4.

 


 
Gold Broke above 2-Month Descending Broadening Wedge Pattern

 

The gold index formed a 2-month descending broadening wedge. The price broke above the upper boundary of the wedge. It is bullish with an upside price target projected at 1910.

 

 
Silver in 3-Month Falling Wedge Pattern

 

The silver index is forming a 3-month falling wedge pattern. It would become bullish if the price breaks above the upper boundary of the wedge.

 

 
Crude Oil in 2-Month Ascending Triangle Pattern

 

The crude oil index is forming a 2-month ascending triangle pattern. It is neutral before the price breaks out from the triangle.

 


 
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 precious metal is underperforming.