Latest Market Update

Setting Up a Santa Claus Rally

Sunday, December 21, 2014

The S&P 500 index ended its downward intermediate wave 2 as the Fed’s pledge to remain “patient” stayed in focus. The sharp rebound since last Wednesday has started the intermediate third wave and it potentially can reach to 2225 for the S&P 500 index. The Broad Market Instability index went below the panic threshold and the momentum turned to positive. The broad stock market is projected to stay in a short-term bullish time-window until 1/6/2015. This bullish time-window most likely will let the market have a Santa Claus rally within the last five days of the year and first two in January. The U.S. dollar edged up adding to multiyear highs, and it still has an upside potential. Crude oil hovers near multi-year low, and it should have a rebound soon.

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Countdown to finishing 2014 for stock market winners and losers:

2014 Stock Market Gain by Country (12-19-2014)

2014 Sector Gain (12-19-2014)

 


 

Stock Market Intermediate Correction Underway

Sunday, December 14, 2014

Last week the stock market went into an intermediate level correction after the warning signal from unusual high readings of the High Low Logic Index in the New York Stock Exchange. The Broad Market Instability index continued surging above the panic threshold. The S&P 500 index and the German DAX have begun the second intermediate wave which is a corrective wave for a retracement. The Shanghai Stock Exchange Composite index is ending its powerful third intermediate wave after it reached 3091 which is slightly below our third upside price target 3150. The broad stock market is projected to stay in a short-term bearish time-window until 12/23/2014.

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Unusual and Inconsistent Market Internals

Sunday, December 7, 2014

As a new Chinese bull market woke up, the Shanghai Stock Exchange Composite Index advanced explosively and reached our second upside price target 2850. Now a new chart pattern analysis projects another upside price target at 3150 for the Shanghai index. The U.S. stock market continues positive drifting near its all time high while the Broad Market Instability Index stays above the panic threshold. Increasing numbers of new 52-week highs and lows in the New York Stock Exchange present a strong divergence and indicate inconsistency of market internals. Current unusual high readings of the High Low Logic Index flash a warning signal that it is time to be cautious about the U.S. stock market.

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Bullish Stock Market but Not All Sectors

Sunday, November 30, 2014

The stock market, U.S. dollar, and 30-year U.S. treasury bond all are bullish, and their prices hover near their 52-week highs. However our weekly updated sector performances show a strong divergence of stock sectors, as semiconductors, home construction, and biotech sectors are near 52-weeks highs while precious metals, oil equipment, and energy sectors are close to 52-weeks lows. Especially the momentum of the general stock market is still weakening but the volatility has a sign to jump up. In overseas markets, last week the Shanghai Stock Exchange Composite index had a powerful bullish breakout from a 3-year rectangle bottom pattern, and confirmed the change of its long-term trend from a bear market to a bull market.

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What Does Primary Fifth Wave Mean to S&P 500?

Sunday, November 23, 2014

The powerful rebound since mid October has pushed the S&P 500 index into the primary fifth wave which is the final upward leg of the multi-year-long bull market started from 2009. This primary fifth wave sets potentially another major upward move for the stock market from the October low in 2014 to the pre-election year high in 2015. Still, there will be a possible consolidation on the S&P 500 index as the momentum is weakening. The broad stock market is projected to stay in a short-term neutral time-window until 11/28/2014. A bullish breakout from a multimonth descending broadening wedge pattern is emerging on gold, silver, and their mining stocks although their trend is bearish.

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Stock Market is Losing Momentum

Sunday, November 16, 2014

The stock market stays at record highs but momentum is decreasing. There will be a potential pullback on the S&P 500 index, suggested by Elliott wave analysis on the next projected downward wave. The broad stock market is projected to stay in a short-term neutral time-window until 11/28/2014. Gold, silver, and their mining stocks are all forming a multimonth descending broadening wedge pattern which is potentially a bullish reversal pattern although their trend is bearish.

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Possible Consolidation for Overbought Stock Market

Sunday, November 9, 2014

The broad stock market has been in a sharp rebound for over three weeks. The S&P 500 index made another new all-time high as the U.S. dollar reached a four-year high and the 30-year U.S. treasury bond extended its 10-month bullish uptrend. Elliott wave analysis suggests a pullback in the S&P 500 index ahead, with a downward wave counted as either the intermediate C wave or the intermediate second wave. The broad stock market is about to turn from bullish to neutral, and is projected to stay in a short-term neutral time-window until 11/28/2014. There is a potential bullish reversal for gold, silver, and their mining stocks as some of them hit and bounced off downside technical levels.

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SPX Hit a New Record Ahead of Midterm Elections

Sunday, November 2, 2014

The broad stock market continued its sharp rebound after a recent correction. The S&P 500 index (SPX) fast hit a new record high. The bullish tone should extend to the next week, and the broad stock market is projected to stay in a short-term bullish time-window until 11/4/2014 which coincides with the U.S. general election day. Although the stock market may extend the rally further, a pullback could occur after the election, with a downward wave counted as either the intermediate C wave in the complex-correction scenario or the intermediate second wave in the expanded-flat-correction scenario. Following the falling Japanese yen in a surprise stimulus move from the Bank of Japan, gold, silver and their mining stocks all are bearish below their descending triangle patterns.

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A Bullish Tone in Stocks

Sunday, October 26, 2014

The stock market had a big rebound and set a bullish tone as U.S. general election day approaches. Biotech, Healthcare, and Home Construction sectors led the rally. The Broad Market Instability index (BIX) has returned into a low volatility territory. The correction may near the end when the primary corrective fourth wave of the S&P 500 index reaches its late part. The broad stock market is projected to stay in a short-term bullish time-window until 11/4/2014 which is coincident with the U.S. general election day. In the German DAX index, the one-year head-and-shoulders top pattern has completed and it could become a precursor of a potential “Three Peaks and a Domed House” pattern. Crude oil is in a Bump-and-Run Reversal Bottom pattern and is due for a rebound.

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SPX, DAX and Crude Oil are Due for a Rebound

Sunday, October 19, 2014

In the last four weeks, the stock market experienced a major correction and got into an oversold condition. By last Wednesday, the S&P 500 index (SPX) declined 7.40% from its all time high while the Broad Market Instability index (BIX) surged to 690 which is the highest reading over three years. In general, a major correction in midterm election years is a typical market behavior. Late last week the S&P 500 index bounced off the 1820 level which is an important support based on the low of the previous intermediate wave 4. After it declined 14.53% from its all time high, the German DAX index reached and bounced off the 8450 support level estimated for the breakdown of a head-and-shoulders top pattern. Although these key technical support levels may get retested, the broad stock market is due for a rebound, and a short-term bullish time-window is projected to open until 11/5/2014. Also crude oil is forming a Bump-and-Run Reversal Bottom pattern and is very close to a bullish breakout point on its declining bump trendline.

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Complex Correction Continues

Sunday, October 12, 2014

The broad stock market is still in a complex correction with primary corrective wave 4. The S&P 500 index is in the second intermediate A-B-C corrective wave sequence of the complex correction. Due to breaching the low of the previous A-B-C flat correction by the current downward A-wave, this second A-B-C corrective sequence could be in a Zigzag-Correction formation to potentially have more dynamic moves in the downside. Last week the Broad Market Instability Index (BIX) had a panic spike up to 416 which is the highest reading over two years. This is one of five major spikes of the BIX in last three years, and each of them corresponds to a 5-10% correction on the S&P 500 index. Internationally, there is a warning sign on the German stock market. The German DAX has broken below the 9000-level neckline of a head-and-shoulders top pattern, and 8450 could be a level for support.

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Broad Stock Market in a Complex Correction

Sunday, October 5, 2014

The S&P 500 index is in a complex correction having a double intermediate A-B-C corrective sequence. A big rebound buoyed by last Friday’s favorable jobs report should make a turning point to end the downward A wave and to start the upward B wave of the second intermediate A-B-C corrective pattern. The broad stock market is projected to turn into a short-term bullish time-window next week and would stay in the bullish time-window until 10/27/2014. The U.S. dollar had a bullish breakout from a 3-year ascending broadening triangle pattern last week, and it could continue going up to 90. Gold and silver are facing a pressure from the U.S. dollar’s advance.

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Complex Correction Makes Stock Market Choppy

Sunday, September 28, 2014

Following the warning sign from wave X, the S&P 500 index fell from its all time high and got into the second A-B-C corrective wave pattern while the Broad Market Instability index surged to a 7-month high. The primary fourth wave is becoming a complex correction that could make the current primary corrective wave in a sideways-market pattern. The broad stock market is projected to be in a short-term neutral time-window until 9/30/2014 and would be in a short-term bullish time-window until 10/17/2014.

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Stocks in a Sideways Market Likely

Sunday, September 21, 2014

The U.S. 30-year treasury bond bounced off the lower boundary of its 9-month uptrend channel while the U.S. dollar continued to test the upper resistance level near 85. Gold and silver are in a descending triangle pattern for their next breakout. The crude oil is still in a multi-month bearish downtrend channel. Although the S&P 500 index was near the all time high, the Broad Market Instability (BIX) surged above the panic threshold level and the momentum indicator stayed in the negative territory last week. The current upward wave on the S&P 500 index is characterized as wave X which is a warning sign for another potential A-B-C corrective pattern to form a complex correction or a sideways market. The broad stock market is projected to be in a short-term neutral time-window until 9/24/2014 and would be in a short-term bullish time-window until 10/3/2014.

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Watch Out Intermarket Technical Key Levels

Sunday, September 14, 2014

Anxiety ahead of the Fed’s policy meeting this coming week generated a bearish sentiment on financial market indices except the U.S. dollar. Several major market indices approach critical boundaries of their chart patterns. The U.S. dollar is meeting the upper resistance level 84.5 of its 3-year long-term horizontal trading range. The U.S. 30-year treasury bond reaches the lower boundary of its 8-month uptrend channel. The gold index is waiting for a major breakout from a 16-month descending triangle pattern. The S&P 500 index has started the intermediate C wave towards the downside, and the 1910 level will be a key level to keep eyes on. The broad stock market is projected to be in a short-term bearish time-window until 9/19/2014 which will be coincident with September Triple Witching day. The German DAX continues to form a potential head-and-shoulders top pattern having a neckline at the 9000 level.

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S&P 500 Index at a Turning Point

Sunday, September 7, 2014

The U.S. dollar made a 52-week high and reached our upside price target 83.5. The U.S. 30-year treasury bond retreated after it touched the upper boundary of its 8-month uptrend channel. The S&P 500 index is at a turning point to end the intermediate upward B wave and to start the intermediate C wave towards the downside. The broad stock market is projected to be in a short-term bearish time-window until 9/19/2014 which will be coincident with September Triple Witching day. The German DAX looks like forming a head-and-shoulders top pattern with a neckline at the 9000 level. The Shanghai Composite index had a bullish breakout from an one-year horizontal trading range, and further signaled a long-term bullish reversal of the Chinese stock market from its multi-year low.

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The Stock Market Now in September

Monday, September 1, 2014

As the U.S. 30-year treasury bond makes another 52-week high and the U.S. dollar challenges its 52-week high, the strong August rebound of the S&P 500 index driven by the intermediate upward B wave nears its end. The intermediate C wave will start towards the downside as soon as the B wave ends. Although a flat correction pattern is most likely, the August low around 1910 will be a key level to test the strength of the S&P 500 index. A weakening market is projected towards September Triple Witching day. The German DAX has more downside risk with its potential zigzag correction pattern. The India Bombay Stock Exchange index is still in a bullish uptrend along its accelerated slope driven by excessive speculation. The recent powerful rebound of the Shanghai Composite index is blocked by a strong resistance at the 2250 level, and it is gathering energy for the next breakout from the resistance.

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U.S. Dollar Bullish Breakout from a Range

Sunday, August 24, 2014

The U.S. dollar broke above the upper resistance of a 9-month horizontal trading range, and advanced sharply. As the intermediate upward B wave sends the S&P 500 to an all time high, the intermediate A-B-C corrective wave structure is becoming a flat correction in a pattern of either an expanded flat or a running flat depending on how the next C wave goes. The German DAX is recently much weaker than the S&P 500 index, and its next C wave could go much lower than the A wave because its current intermediate A-B-C correction is most likely a zigzag correction rather than a flat correction.

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U.S. 30-Year Treasury Bond at 52-Week High

Sunday, August 17, 2014

The 30-year U.S. treasury bond index rallied up to a 52-week high within a 7-month bullish uptrend channel. The S&P 500 index rebounded with intermediate wave B which is the middle part of an intermediate A-B-C corrective phase. The biotech, semiconductors, and precious metals sectors are ranked at the top of the sector performance for last week. Our major global market performance ranking has the Hong Kong stock market at the top and the German stock market at the bottom for last week.

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U.S. Treasury Bond Prices Leading

Sunday, August 10, 2014

The 30-year U.S. treasury bond index remains in a 7-month bullish uptrend channel while the U.S. dollar is in a 9-month neutral horizontal trading range. The gold index and the precious metals sector continue to build up bullish patterns for the next breakout. The first downward leg of the primary correction on both the S&P 500 index and the German DAX nears its end, and a rebound is expected before the second downward leg of the correction. Our major global market performance ranking has the Chinese stock market at the top and the Russian stock market at the bottom for last week.

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The Broad Stock Market in a Correction

Sunday, August 3, 2014

The S&P 500 index and the German DAX sharply broke down their multi-month Ending Diagonals early than expected, and started a correction with the intermediate A-wave which is the first downward leg of the primary corrective fourth wave. The Broad Market Instability index surged above the panic threshold level. At the opposite side, the Shanghai composite index may come to the end of its years-long bear market after a recent bullish explosive breakout from a 5-year Ending Diagonal. The broad stock market is projected to be in a short-term bearish time-window until 8/13/2014.

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