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6/27/2011

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 13-Month “Falling Wedge” Pattern
  • Broad Stock Market Forming a 8-Week “Descending Broadening Wedge” Pattern
  • Market Volatility is below the Panic Threshold
  • Asset Class Performance Ranking with Bond Leading
  • Sector Performance Ranking with Biotech Sector Leading
  • BRIC Stock Market Performance Ranking with India 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 an intermediate-term “Bump and Run Reversal Top” pattern that was identified in my market weekly update of 5/1/2011 (see here).  Recently the silver index has been in the late part of the “Bump” phase and it has swung in the territory between the warning line and the lead-in trendline, as shown in the chart below. Last Friday, the silver index broke support from the lead-in trendline and entered into the “Run” phase to plunge lower in a downhill run.  The next downside price target is projected at around $29/oz by the target line which is parallel to the lead-in trendline and is distant from the lead-in trendline with the same lead-in height. The move of the silver index of last several weeks can also be characterized in the progress of a “Dead-Cat Bounce” pattern (see here) towards a postbounce decline.


Gold Index is in a 9-Month “Three-Peaks and Domed-House” Pattern

The gold index approaches the “Plunge” phase. 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 13-Month Falling Wedge Pattern
The US dollar is breaking the upper boundary of the 13-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 8-Week Broadening Wedge Pattern
The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total equity market, is forming a 8-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 positive 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 bullish 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 below the Panic Threshold
The Broad Market Volatility (BIX), measured from over 8000 U.S. stocks, closed at 20 on Friday, and it is below the panic threshold level of 45. The BIX below the panic threshold indicates that the current market is bullish. The BIX is plotted in the following chart as compared with the Wilshire 5000 index.
 

Asset Class Performance Ranking with Bond Leading
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently treasury bonds and gold are outperforming. Oil, food and equity market are underperforming.


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 2.41% below the EMA89. Outperforming sectors are Biotech (+1.43%), Pharmaceuticals (+1.10%), and Healthcare (+1.00%). Underperforming sectors are Banks (-7.53%), Precious Metals (-6.53%), and Semiconductors (-5.64%). The S&P 400 Mid-cap (-1.53%) is outperforming the market, and the NASDAQ 100 (-3.34%) is underperforming.
 

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