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6/5/2011

Table of Contents

  • Status of Key Market Parameter
  • Silver Index is Locked in “Bump-and-Run” Pattern
  • Gold Index is in “Three-Peaks and Domed House” Pattern
  • US Dollar is a 12-Month “Falling Wedge” Pattern
  • Broad Stock Market Broke to the Downside of 3-Month “Rising Wedge” Pattern
  • Market Volatility is above the Panic Threshold
  • Asset Class Performance Ranking with Gold Leading
  • Sector Performance Ranking with Biotech Sector Leading
  • BRIC Stock Market Performance Ranking with all BRIC Markets Lagging

 
Current Status of the LWX (Leading Wave Index)

 

The LWX Indicator in Last Four Weeks (Past)

 

The LWX Indicator in Next Four Weeks (Forecast)


Silver Index is Locked in Bump-and-Run Pattern

The silver index is in the late part of the “Bump” phase and has not entered the “Run” phase yet. As shown in the chart below, recently silver prices have swinged in the region between the warning line and the lead-in trendline. The “Run” phase could happen once prices break down the lead-in trendline. The silver index may also be in the progress of a “Dead-Cat Bounce” pattern (see here) for a postbounce decline.  The lead-in trendline now is a critical line to be watched out.


 

Gold Index is in a 8-Month “Three-Peaks and Domed-House” Pattern

 

The gold index has not got into the “Plunge” phase yet. The current up-swing could be wave 25 of George Lindsay’s “Three-Peaks and Domed House” model (see here).

 

 
U.S. Dollar is Forming a 12-Month Falling Wedge Pattern
 
The US dollar has formed a 12-month “Falling Wedge” (see here) pattern which is a potential bullish reversal pattern sooner or later as it matures. It now swings inside the wedge, and is still to early to determine if the US dollar is in a bullish reversal before it breaks above the top boundary of the wedge.


 
Broad Stock Market Index Broke to the Downside of 3-Month Rising Wedge Pattern
 
The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total equity market, broke down the lower boundary of the 3-month “Rising Wedge” (see here) pattern, and it is a process of correcting the rising wedge to an uptrend channel. Currently the market is below the 89-day moving average and it is in the downtrend zone below the rising wedge with negative readings of both the trend and momentum. The Leading Wave Index (LWX) indicator, color coded in the price bars of the following daily chart of the Wilshire 5000 index, closed in bearish on Friday. The LWX forecasts that next four weeks should be in a bullish time-window for the broad equity market.
 


 
Broad Market Volatility is above the Panic Threshold
 
The Broad Market Volatility (BIX), measured from over 8000 U.S. stocks, closed at 78 on Friday, and it is above the panic threshold level of 44. The BIX above the panic threshold indicates that the current market is bearish. The BIX is plotted in the following chart as compared with the Wilshire 5000 index.
 
 

 
Asset Class Performance Ranking with Gold Leading
 
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently gold and treasury bonds are outperforming the stock market. The US dollar and oil are underperforming the stock market.
 


 
Sector Performance Ranking with Biotech 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 0.92% below the EMA89. Outperforming sectors are Biotech (+4.39%), Pharmaceuticals (+3.34%), and Healthcare (+3.31%).  Underperforming sectors are Banks (-7.69%), Financials (-3.95%), and Precious Metals (-2.92%). The S&P 400 Mid-cap (-0.41%) is outperforming the market, and the Russell 2000 small-cap (-1.14%) is underperforming.
 
 

 
BRIC Stock Market Performance Ranking with All BRIC Markets Lagging
 
The table below is the percentage change of the BRIC stock market indexes against the 89-day exponential moving average (EMA89). The Chinese, Brazilian, India, and Russian markets all are underperforming the U.S. market.
 
 
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