Table of Contents
- Status of Key Market Parameters
- Silver is in the “Run” Phase
- Gold Forming a “Bump-and-Run” Pattern
- Gold slipped into the “Plunge” Phase
- S&P 500 Index is in “Basement” Phase
- Broad Market Forming a 7-Week Horizontal Channel
- Broad Market Instability is above the Panic Threshold
- US Dollar Stays above 5-Month Horizontal Channel
- US Treasury Bond is in a 7-Week Uptrend Channel
- Asset Class Performance Ranking with Bond Leading
- Sector Performance Ranking with Utilities Sector Leading
- BRIC Stock Market Performance Ranking with Indian 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 is in the “Run” Phase
The silver index is in the “Run” phase of a “Bump-and-Run Reversal Top” pattern (read here). Last week it finally started a downhill run and quickly broke through supports of both the lead-in trend line” at 39.5 and the first target line at 33. The next price target is around 26 to look for support at the second target line, as shown in the chart below.
Gold is forming an 18-Month “Bump-and-Run Reversal Top” Pattern
The gold index is forming an 18-month “Bump-and-Run Reversal Top” pattern and it currently is in the “Bump” phase, as shown in the chart below. After it crossed below the sell line at 1850, massive sell-off has sent gold through the warning Line at 1670. The next target prices:
1) 1500 at the Lead-in Trend Line
2) 1350 at the Target Line
Gold slipped into the “Plunge” Phase of “Three-Peaks and a Domed House” Pattern
Finally, the gold index last week had a phase transition from the “Roof” phase to the “Plunge” phase in its “Three-Peaks and a Domed House” pattern. The “Plunge” phase typically contains two powerful down waves. Now gold is just in the first down wave. The range of the “Plunge” phase for gold is from 1750 to 1300.
S&P 500 Index is in the “Basement” Phase of “Three-Peaks and a Domed House” Pattern
The S&P 500 index is in the progress of potentially forming a “Three-Peaks and a Domed House” pattern as shown in the chart below. Currently it is in the “Basement” phase (bear trap) which is typically a very choppy period with up and down waves 11-14. Now it should have reached point 14. If it is able to stay on track and does not break to the downside, its next move should be an explosive advance from point 14 to point 15 in order to have a phase transition from the “Basement” phase to the “First Floor” phase. Considering the current inverse relationship between the S&P 500 index and gold, this explosive advance for the S&P 500 should be possible as gold gets into a powerful downwave.
Broad Stock Market Forming a 7-Week Horizontal Channel
The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total equity market, is forming a 7-week horizontal channel pattern (trading range). Currently the market is below the 89-day moving average and it is in the choppy zone of the horizontal channel 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 bullish on Friday. The LWX forecasts a bullish time-window for the broad equity market.
Broad Market Instability Index is above the Panic Threshold
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, close at 160 on Friday. This reading is above the panic threshold level of 45. The BIX is plotted in the following chart as compared with the Wilshire 5000 index.
U.S. Dollar is above 5-Month Horizontal Channel
The US dollar index stays above 5-month horizontal channel. 79 could be a short-term price target.
U.S. Treasury Bond is in a 7-Week Uptrend Channel
The 30-Year US Treasury Bond index is in a 7-week uptrend channel.
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 bond and the US dollar are outperforming. Oil, the equity market and food are underperforming.
Sector Performance Ranking with Utilities 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 8.67% below the EMA89. Outperforming sectors are Utilities (0.40%), Biotech (-2.07%), and Semiconductors (-2.95%). Underperforming sectors are Banks (-18.45%), Materials (-18.06%), and Energy (-15.16%). The NASDAQ 100 (-2.05%) is outperforming the market, and the Russell 2000 Small-cap (-12.47%) is underperforming.
BRIC Stock Market Performance Ranking with Indian Market Leading
The table below is the percentage change of the BRIC stock market indexes against the 89-day exponential moving average (EMA89). The Indian and chinese markets are outperforming the U.S. market, and the Russian and Braziliann markets are underperforming.
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