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10/03/2021 – Market Update

October 4, 2021 Leave a comment Go to comments

 

S&P 500 Index Breached 89-Day EMA

 

The S&P 500 index breached its 89-day exponential moving average (EMA) to the downside first time since last November, and it could be the beginning of an intermediate downward wave. Energy, Banks, and Oil Equipment ranked as the top three sectors with mostly strong technical strengths. The US dollar and crude oil were bullish last week while gold, silver and the 30-year U.S. treasury bond were bearish. The broad stock market is projected to be in a short-term neutral time-window until 10/5/2021.

 
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 59 on Friday 10/1/2021 (up from 40 the previous week) which is above the panic threshold level of 42 and indicates a bearish market. The Wilshire 5000 index is right at 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 neutral time-window until 10/5/2021.

 

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: 10/19/2021
Broad Market Instability Index (BIX): 59, above the panic threshold (bearish)
Momentum Indicator: slightly positive (neutral)

 

 
Sector Performance Ranking with Energy 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 Energy, Banks, and Oil Equipment. Underperforming sectors are Precious Metals, Home Construction, 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 formed a 5.5-month rising wedge pattern. The price has broken below the lower boundary of the wedge. 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 1-Month Ascending Broadening Wedge Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 1-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 is forming a 2-month ascending broadening wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.

 

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 Broke Below 2-Month Symmetrical Triangle Pattern

 

The 30-year U.S. treasury bond index formed a 2-month symmetrical triangle pattern. The price broke below the lower boundary of the triangle last week. It is bearish with a downside price target projected at 160.5. This price target has been quickly reached.

 


 
US Dollar in 3.5-Month Ascending Broadening Triangle pattern

 

The U.S. dollar index is forming a 3.5-month ascending broadening triangle pattern. It is bullish as long as the price stays above the lower boundary of the triangle.

 


 
Gold in 3.5-Month Descending Broadening Triangle Pattern

 

The gold index is forming is forming a 3.5-month descending broadening triangle pattern. It is bearish before the price breaks above the upper boundary of the triangle.

 

 
Silver in 3.5-Month Descending Broadening Wedge Pattern

 

The silver index is forming a 3.5-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.

 

 
Crude Oil in 7-Week Rising Wedge Pattern

 

The crude oil index is forming a 7-week rising wedge pattern. It is bullish before the price breaks below the lower 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.

 

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