8/21/2010
The LWX in Last Four Weeks (Past)
The LWX in Next Four Weeks (Forecast)
The Broad Market Volatility is above the Panic Threshold
The BIX (Broad Market Volatility) closed at 68 on Friday and it is above the panic threshold level of 47. The volatility level of 68 is relative high and it indicates that the current market is bearish.
Market is Building up an Ascending Triangle Pattern
In the bearish shadow of the four-month downtrend channel between two pink lines, the Dow Jones Wilshire 5000 (DWC) is forming a potential ascending triangle between two blue lines. Currently the index is in the choppy zone of the triangle. Based on the forecast of the LWX (Leading Wave Index), the market may still have another two weeks in the current bullish time window. The colors on the price bars represent the status of the LWX.
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Trend indicator: down
Momentum indicator: negative
Sector Ranking
The following table is the percentage change of sectors and major market indexes against the 89-day exponential moving average (EMA89). The Dow Jones Wilshire 5000, as an average or a benchmark of the total market, is down 2.93%. Outperforming sectors are Precious Metals (up 3.73%), Internet (up 3.41%), and Telecommunication (up 2.74%). Underperforming sectors are Banks (down 9.48%), Semiconductors (down 6.80%), and Financials (down 5.65%). The Dow Jones 30 (down 1.71%) is outperforming the market, and the Russell 2000 small-cap (down 5.29%) is underperforming.
The Chinese Market
The following chart is a weekly chart of the Shanghai Stock Exchange Composite Index. Since the bearish dead cross in the early of this year, the Chinese market has been in a downtrend by staying under the 17-week moving average (equivalent to 89-day moving average). It is currently in a 13-month downtrend channel (between two blue lines), and in the choppy zone of the channel between 2250 and 3000. However, if the index successfully crosses over both of the 17-week moving average and the pink dotted median line of the 13-month downtrend channel around 2650 marked by a red circle, it should be characterized as a potential bullish golden cross. Currently the index is still testing the 17-week moving average.
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