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September 4, 2010 Leave a comment Go to comments
Current Status of the LWX (Leading Wave Index)
The LWX in Last Four Weeks (Past)
The LWX in Next Four Weeks (Forecast)
The Broad Market Volatility is below the Panic Threshold
The BIX (Broad Market Volatility) closed at 2 on Friday and it is below the panic threshold level of 47. The volatility level of 2 is very low and it indicates that the current market is bullish.
Market is in a Symmetrical Triangle Pattern
The Dow Jones Wilshire 5000 (DWC) is forming a symmetrical triangle pattern between two yellow lines.  The index reached the upper boundary of the triangle on Friday, and now it is above the 89-day moving average again.  If the index breaks the upper boundary to the upside, the market will get out of the bearish shadow of the 4.5-month downtrend, and will become very bullish.  Currently we are still in a range-bound market that is in the choppy zone of the triangle. The colors on the price bars represent the status of the LWX (Leading Wave Index).  Based on the forecast of the LWX, the bullish time window for the market has extended to the early of November that would coincide with the time of the midterm election.  Somehow this bullish projection of the LWX is contradictory to the current widespread bearish and scary opinions of “Head-and-Shoulder“, “Hindenburg Omen“, and “September-October-Bearish–Season” (click the links to see details).  Set guards at both boundaries of the symmetrical triangle; be really bullish with an upward breakout or really bearish with a downward breakout.
Trend indicator: up
Momentum indicator: positive
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 up 0.97%. Outperforming sectors are Internet (up 7.45%), Real Estate (up 6.96%), and Precious Metals (up 6.40%). Underperforming sectors are Semiconductors (down 5.55%), Banks (down 3.57%), and Technology (down 1.31%)The S&P 400 mid-cap (up 1.94%) is outperforming the market, and the Russell 2000 small-cap (up 0.75%) is underperforming.  
The Chinese Market, Waiting for an Explosive Kick-off from 2650
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. This is the sixth week for the index around this critical level of 2650. Watch out for a kick off.  It could be very explosive.

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