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7/10/2011

Table of Contents
  • Status of Key Market Parameters
  • Silver Index is Locked in “Bump-and-Run” Pattern
  • Gold Index is in “Three-Peaks and Domed House” Pattern
  • US Dollar is above the Upper Boundary of 13-Month “Falling Wedge” Pattern
  • Broad Stock Market is in 6-Month Horizontal Channel
  • Market Volatility is below the Panic Threshold
  • Asset Class Performance Ranking with Gold Leading
  • Sector Performance Ranking with Internet 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 has completed the “Bump” phase and has started the “Run” phase.  It currently is re-testing the lead-in trendline. 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) now in the post-bounce decline phase.


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

The gold index moved away from the “Plunge” phase.


U.S. Dollar is above the upper boundary of 13-Month Falling Wedge Pattern
The US dollar index is above the upper boundary of the 13-month “Falling Wedge” (see here) pattern which is a bullish reversal pattern. Now the upper boundary of the falling wedge becomes a support line.


Broad Stock Market is in a 6-Month Horizontal Channel
The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total equity market, has formed a 6-month horizontal channel.  Currently the market is above the 89-day moving average and it is in the choppy zone of the horizontal channel 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 8 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 major volatility spike in June is behind us. 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 the equity market are outperforming. Oil, the US dollar, and food are underperforming.


Sector Performance Ranking with Internet 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 3.23% above the EMA89. Outperforming sectors are Internet (+6.47%), Consumer Services (+5.13%), and Real Estate (+4.98%). Underperforming sectors are Banks (-3.24%), Financials (0.02%), and Semiconductors (+0.77%). The Russell 2000 Small-cap (+4.68%) is outperforming the market, and the S&P 500 (+2.84%) 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 Brazilian and Chinese markets are underperforming the U.S. market.
 
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