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09/12/2021 – Market Update

September 13, 2021 Leave a comment

 

Stock Market Pullback

 

The stock market started to pull back with an increasing volatility last week. Technology, Semiconductors, and Real Estate ranked as the top three sectors with mostly strong technical strengths. Watch out for a downward breakout of the S&P 500 index from its multi-month rising wedge pattern. The 30-year U.S. treasury bond is also waiting for a breakout from a symmetrical triangle pattern. The broad stock market is projected to be in a short-term bearish time-window until 9/27/2021.

 
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Broad Market in Short-Term Bearish Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 35 on Friday 9/10/2021 (up from 5 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 negative. 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 9/27/2021.

 

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: downward
Date of Next Cycle Low: 9/27/2021
Broad Market Instability Index (BIX): 35, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)

 

 
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, Semiconductors, and Real Estate. Underperforming sectors are Oil Equipment, Precious Metals, 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 5.5-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 4150.

 


 
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 Ascending Broadening Wedge Pattern


 

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

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index formed a 3-month descending broadening wedge pattern. The price has broken above the upper boundary of the wedge. It is bullish with an upside price target projected at 3720.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 11-month ascending triangle pattern. It is neutral before the price breaks out from the triangle.

 


 
US Treasury Bond in 2-Month Symmetrical Triangle Pattern


 

The 30-year U.S. treasury bond index is forming a 2-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.

 


 
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 6-Week Symmetrical Triangle Pattern


 

The silver index is forming a 6-week symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.

 

 
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 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 oil is outperforming and the US dollar is underperforming.

 

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