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09/19/2021 – Market Update

September 20, 2021 Leave a comment

 

Stocks Moved Lower ahead of Fed Meeting

 

The stock market declined to near a 2-month low ahead of next week Fed Meeting. Technology, Semiconductors, and Real Estate ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index turned bearish as the price breached the lower boundary of a multi-month rising wedge pattern. The 30-year U.S. treasury bond is still neutral with a symmetrical triangle pattern. The broad stock market is projected to be in a short-term bearish time-window until 9/27/2021.

 
Table of Contents

 

 

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 9/17/2021 (unchanged from 35 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 Precious Metals, Oil Equipment, and Materials.

 

 

 
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. The price breached lower boundary of the wedge last week. It is bearish with a downside price target projected at 4250.

 


 
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 5-Month Ascending Broadening Wedge Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 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. The upside price target projected at 3720 has been reached. Now it is in a consolidation.

 

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 3-Month Ascending Broadening Triangle pattern

 

The U.S. dollar index is forming a 3-month ascending broadening triangle pattern. It is bullish as long as the price stays above the lower boundary of the triangle.

 


 
Gold in 3-Month Descending Broadening Triangle Pattern

 

The gold index is forming is forming a 3-month descending broadening triangle pattern. It is bearish before the price breaks above the upper boundary of the triangle.

 

 
Silver Broke Below 6-Week Symmetrical Triangle Pattern

 

The silver index formed a 6-week symmetrical triangle pattern. The price broke below the lower boundary of the triangle. It is bearish with a downside price target projected at 22.4. This price target has been quickly reached.

 

 
Crude Oil in 3-Month Descending Broadening Wedge Pattern

 

The crude oil index formed a 3-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 gold is underperforming.