Latest Market Update

SPX and DAX in Late Part of Intermediate Fifth Wave

Sunday, July 27, 2014

The S&P 500 index and the German DAX approach the late part of the intermediate impulse fifth wave which is the final leg of the 34-month-long primary third wave before a major correction. Their recent 3-month ending diagonal patterns imply a bearish reversal ahead for the medium-term. At the opposite side, the Chinese stock market has a fresh long-term bullish reversal signal with a major bullish breakout from its 5-year falling wedge pattern. Gold, silver, and their mining stocks are developing bullish patterns for the next breakout. The U.S. treasury bond remains in a 7-month bullish uptrend channel while the U.S. dollar is in a 9-month neutral horizontal trading range. The broad stock market is projected to be in a short-term bullish time-window until 8/7/2014.

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Bullish Bias in Commodity-Related Sectors

Sunday, July 20, 2014

Gold, XAU gold/silver mining stock index, GDX gold miners ETF, and crude oil continue developing bullish patterns. Semiconductors, precious metals, and oil equipment sectors were ranked as top performers last week. The broad stock market is still in a short-term corrective wave inside a 3-month Ending Diagonal, and it is projected to be in a short-term bearish time-window until 7/23/2014.

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The Broad Stock Market in a Short-Term Corrective Wave

Saturday, July 12, 2014

The S&P 500 index is in a short-term corrective wave inside a 3-month Ending Diagonal. Gold continues developing a potential bullish reversal pattern. The precious metals sector is ranked as a top performer this week. The 30-year U.S. treasury bond resumed its uptrend. The broad stock market is projected to be in a short-term bearish time-window until 7/23/2014.

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The S&P 500 Index in an Ending Diagonal Pattern

Sunday, July 6, 2014

The S&P 500 index is forming an Ending Diagonal together with the intermediate fifth wave as the final leg of the 33-month-long primary third wave. Gold is developing a potential bullish reversal pattern. The 30-year U.S. treasury bond had a bearish downward breakout from a rising wedge pattern while interest rates jumped. Interest-rate-sensitive sectors like utilities and real estate are underperforming the general stock market. The broad stock market is projected to be in a short-term neutral time-window until 7/10/2014.

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Stock Markets Stalling with a Bearish Bias

Sunday, June 29, 2014

Gold/silver and crude oil are in consolidations after the recent bullish breakouts from their technical resistances. Both the S&P 500 index and the 30-year U.S. treasury bond are in rising wedge patterns which are building up a bearish bias for the near future. The broad stock market is projected to be in a short-term neutral time-window until 7/3/2014, but a bearish time-window right after.

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Gold and Silver Start Shining Again

Sunday, June 22, 2014

Gold and silver had explosive upward breakouts last week following the bullish breakouts of crude oil, XAU gold/silver mining stock index and GDX gold miners ETF. Commodity-related sectors continue to outperform the general market. Semiconductors, oil equipment, and energy sectors ranked as top performers again this week. The inflationary environment is coming back, and it could cause many changes in the financial markets. The broad stock market is projected to be in a short-term bearish time-window until 6/27/2014.

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Commodity-Related Sectors Continue Outperforming

Sunday, June 15, 2014

The positive-to-negative change of the relationship between stocks and bond yields has drawn our attention to the shift from a deflationary environment to an inflationary environment. Commodity-related sectors continue to outperform the general market. This week again we have semiconductors, oil equipment, and energy sectors ranked at the top. Crude oil, XAU gold/silver mining stock index, and GDX gold miners ETF have had bullish breakouts. Gold and silver are very close to a bullish breakout point as well. The broad stock market is projected to be in a short-term bearish time-window until 6/27/2014.

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A Noticeable Sign of Change in Stock-Bond Relationship

Sunday, June 8, 2014

There is a long-term sign that we are in a gradual process of a change from a deflationary environment to an inflationary environment based on a relationship change between stocks and treasury yields. From 1981 to 1999, the correlation mainly stayed in a negative territory that means stocks have an inverse relationship with treasury yields (or positive relationship with treasury bonds). Since 1999, their correlation has changed and mainly stayed in a positive territory, i.e., stocks have a positive relationship with treasury yields (or inverse relationship with treasury bonds). Recently, their relationship starts to change again as the correlation gets into a negative territory.

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Intermediate Fifth Wave Emerges in S&P 500 and DAX

Sunday, June 1, 2014

The environment this year is gradually shifting to inflationary after it has stayed in deflationary for several years. The positive relationship between stocks and bonds is coming back as the environment becomes inflationary again. It should be no surprise that stocks and bonds recently moved up at the same time. After several months in an intermediate flat corrective wave, the S&P 500 index and German DAX get into the intermediate fifth wave which is an upward impulse wave also the final leg of long-term primary wave 3. The broad stock market is projected to be in a short-term bullish time-window until 6/6/2014.

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