2/6/2011
Table of Contents
- Status of Key Market Parameter
- Broad Stock Market Still in 5-Month Rising Wedge
- Market Volatility Still below the Panic Threshold
- Sector Ranking with Energy Sector Leading
- BRIC Stock Market Performance
Current Status of the LWX (Leading Wave Index)
The LWX Indicator in Last Four Weeks (Past)
The LWX Indicator in Next Four Weeks (Forecast)
Broad Stock Market Still in 5-Month Rising Wedge
The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total equity market, is still swinging in a 5-month Rising Wedge with positive readings of both the trend and momentum indicators last week. The market currently is in the choppy zone of the rising wedge, and it may test either upper or lower boundary of the wedge anytime. The Leading Wave Index (LWX) indicator, color coded in the price bars of the following daily chart of the Wilshire 5000 index, was 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 Still below the Panic Threshold
The Broad Market Volatility (BIX), measured from over 8000 U.S. stocks, closed at 19 on Friday and it is below the panic threshold level of 44. The volatility level of 19 is low, and it indicates that the current market is bullish. The BIX is plotted in the following chart as compared with the Wilshire 5000 index.
Sector Ranking with Energy 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 6.57% above the EMA89. Outperforming sectors are Energy (+13.26%), Semiconductors (+10.97), and Technology (+8.45%). Underperforming sectors are Precious Metals (+0.03%), pharmaceuticals (+0.44%), and Biotech (+0.99%), The S&P 400 Mid-cap (+7.58%) is outperforming the market, and the DJ-30 (+5.83%) 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 Russian market (+12.75%) is outperforming the US market. The India market (-7.04%), the Brazilian market (-5.13%) and the Chinese market (-0.60%) are underperforming the US market. Be aware of “climate change” of international stock markets.
Questions: 1) How could the US market be performing so well while other emerging markets are performing so poorly? 2) How could petroleum and basic materials sectors be leading while the precious metals sector is lagging? I will try to give some analysis for these questions next week.
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