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Archive for January 16, 2011
1/16/2011
January 16, 2011
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Table of Contents
- Status of Key Market Parameters
- U.S. Dollar in a Uptrend Channel
- Stock Market in Choppy Zone of a Rising Wedge
- Market Volatility below the Panic Threshold
- Sector Ranking with Banks Sector Leading
- BRIC Stock Market Performances
Current Status of the LWX (Leading Wave Index)
The LWX Indicator in Last Four Weeks (Past)
The LWX Indicator in Next Four Weeks (Forecast)
U.S. Dollar in a Uptrend Channel
The U.S. dollar index is still forming a uptrend channel based on the two-month uptrend line from November low to January low. The pullback in last week just readjusted the angle of the uptrend channel. Also it is still a setup for a Measured Move Up pattern that consists of three parts: 1) November reversal advance, 2) December-January pullback, and 3) a potential continuation advance as shown in the chart below. November reversal advance acted as a led-in move to form the first upleg of the pattern. If December-January pullback ends here, a potential continuation advance could be resumed to form the second upleg that could have the same angle and length as the first upleg. This second upleg suggests a price target at 84.5 by the middle of February.
Broad Stock Market in Choppy Zone of a Rising Wedge
The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total equity market, is in the choppy zone of a 5-month Rising Wedge with positive readings of both the trend and momentum indicators last Friday. The Leading Wave Index (LWX) indicator, color coded in the price bars of the following daily chart of the Wilshire 5000 index, turned bearish last week. Based on the forecast of the LWX indicator, the market is in a neutral time-window that could last weeks until higher market volatility is released.
Broad Market Volatility below the Panic Threshold
The Broad Market Volatility (BIX), measured from over 8000 U.S. stocks, closed at 14 on Friday and it is still below the panic threshold level of 46. The volatility level of 14 is low and it indicates that the current market is bullish. But the BIX is starting turn higher. The BIX is plotted in the following chart as compared with the Wilshire 5000 index.
Sector Ranking with Bank Sector Leading
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 index, as an average or a benchmark of the total market, is 7.53% above the EMA89. Outperforming sectors are Banks (+12.21%), Semiconductors (+12.10%), and Energy (+12.09%). Underperforming sectors are Precious Metals (-0.72%), Pharmaceuticals (+0.55%), and Utilities (+2.55%). The Russell 2000 (+9.56%) is outperforming the market, and the DJ-30 (+4.96%) is underperforming.
BRIC Stock Market Performances
The table below is the percentage change of the BRIC stock market indexes against the 89-day exponential moving average (EMA89). The Russia market (+14.32%) is outperforming the US market. The India market (-4.02%), the China market (-1.39%) and the Brazil market (+2.76%) are underperforming the US market.
