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6/20/2011

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 Breaking the Upper Boundary of 12-Month “Falling Wedge” Pattern
  • Broad Stock Market Forming a 7-Week “Descending Broadening Wedge” Pattern
  • Market Volatility is above the Panic Threshold
  • Asset Class Performance Ranking with Gold Leading
  • Sector Performance Ranking with Pharmaceuticals Sector Leading
  • BRIC Stock Market Performance Ranking with Russian Market Leading

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) to start 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. It could be in wave 26 of George Lindsay’s “Three-Peaks and Domed House” model (see here).


U.S. Dollar is Breaking the upper boundary of 12-Month Falling Wedge Pattern
The US dollar is breaking the upper boundary of the 12-month “Falling Wedge” (see here) pattern which is a potential bullish reversal pattern. The US dollar could be in a bullish reversal once it breaks above the upper boundary of the wedge.


Broad Stock Market Index Forming a 4-Month Broadening Wedge Pattern
The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total equity market, is forming a 7-week “Descending Broadening Wedge” (see here) pattern. Currently the market is below the 89-day moving average and it is in the choppy zone of the broadening 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 125 on Friday, and it is above the panic threshold level of 45. 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. Oil, equity and food are underperforming.


Sector Performance Ranking with Pharmaceuticals 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 3.51% below the EMA89. Outperforming sectors are pharmaceuticals (+1.53%), Healthcare (+1.00%), and Utilities (+0.30%). Underperforming sectors are Banks (-9.27%), Precious Metals (-8.43%), and Semiconductors (-6.44%). The Do Jones industrials (-2.39%) is outperforming the market, and the DASDAQ 100 (-4.76%) is underperforming.
 

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