08/15/2021 – Market Update
Stock Market Momentum Weakening
The stock market drifted up with weakening momentum last week. Home Construction, Banks, and Financials ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index has an extended multi-month rising wedge pattern developed. We ought to be cautious that the S&P 500 index would turn bearish with a downside price target projected at 4075 in case the price breaks below the lower boundary of the rising wedge. The 30-year U.S. treasury bond index continued being bullish with an ascending broadening wedge pattern. The broad stock market is projected to be in a short-term bearish time-window until 9/10/2021.
Table of Contents
- Broad Market to be in Short-Term Bearish Time-Window
- Sector Performance Ranking with Home Construction Leading
- S&P 500 Index Ending Primary Upward Wave X
- German DAX Index: Elliott Wave
- India Bombay Index Broke above 2-Month Ascending Broadening Triangle Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 3-Month Ascending Broadening Wedge Pattern
- US Dollar 2-Month Horizontal Trading Range Pattern
- Gold in 2-Month Descending Broadening Triangle Pattern
- Crude Oil in 2.5-Month Ascending Triangle Pattern
- Asset Class Performance Ranking with Equity Leading
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 31 on Friday 8/13/2021 (up from 17 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 bearish time-window until 9/10/2021.
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: 9/10/2021
Broad Market Instability Index (BIX): 31, below the panic threshold (bullish)
Momentum Indicator: slightly positive (neutral)
Sector Performance Ranking with Home Construction 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 Home Construction, Banks, and Financials. Underperforming sectors are Precious Metals, Oil Equipment, and Internet.
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 4.5-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 Broke above 2-Month Ascending Broadening Triangle Pattern
The India Bombay Stock Exchange 30 Sensex index formed a 2-month ascending broadening triangle pattern. The price broke above the upper boundary of the triangle. It is bullish with an upside price target projected at 54670. This price target has been reached.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 2.5-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 formed a 1.5-year uptrend channel pattern. The price has broken below the lower boundary of the channel. It is bearish with a downside price target projected at 3200.
US Treasury Bond in 3-Month Ascending Broadening Wedge Pattern
The 30-year U.S. treasury bond index is forming a 3-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-Month Horizontal Trading Range Pattern
The U.S. dollar index is forming a 2-month horizontal trading range between 91.8 and 93. It is neutral before the price breaks out from the range.
Gold in 2-Month Descending Broadening Triangle Pattern
The gold index is forming is forming a 2-month descending broadening triangle pattern. It is bearish before the price breaks above the upper boundary of the triangle.
Silver Broke Below 3-Month Falling Wedge Pattern
The silver index formed a 3-month falling wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish as long as the price stays below the lower boundary.
Crude Oil in 2.5-Month Ascending Triangle Pattern
The crude oil index is forming a 2.5-month ascending triangle pattern. It is neutral before the price breaks out from the triangle.
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 precious metal is underperforming.
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