9/11/2010
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 9 on Friday and it is below the panic threshold level of 47. The volatility level of 9 is low and it indicates that the current market is bullish.
Market is Breaking Out to the Upside
The Dow Jones Wilshire 5000 (DWC) index broke the resistance at the upper boundary of the 4.5-month downtrend channel between two dotted pink lines last week. The index stayed above the 89-day moving average also. The market currently is in the uptrend zone. Based on the forecast of the LWX (Lead Wave Index), 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). Actually the market is forming a hidden inverted roof pattern. I will discuss it in the next week market review.
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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 1.16%. Outperforming sectors are Internet (up 6.98%), Telecommunication (up 6.35%), and Precious Metals (up 5.36%). Underperforming sectors are Semiconductors (down 7.85%), Banks (down 2.95%), and Technology (down 1.43%). The Nasdaq 100 (up 2.15%) is outperforming the market, and the Russell 2000 small-cap (down 0.27%) 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 seventh 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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