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Archive for November 28, 2011
11/27/2011
November 28, 2011
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Table of Contents
- Status of Key Market Parameters
- Broad Stock Market is in a “Symmetrical Triangle” Pattern
- Broad Market Instability Index is above the Panic Threshold
- S&P 500 Index Derailed from “Three-Peaks and a Domed House” Pattern
- Gold is in the “Plunge” Phase
- Gold Forming a “Bump-and-Run” Pattern
- Silver is in the “Run” Phase with “Dead-Cat Bounce”
- US Dollar is Breaking to the Upside of “Symmetrical Triangle” Pattern
- 30-Year US Treasury Bond is Forming a Horizontal Channel
- Asset Class Performance Ranking with Bond Leading
- Sector Performance Ranking with Utilities Sector Leading
- BRIC Stock Market Performance Ranking with Brazilian 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)
Broad Stock Market is Forming a “Symmetrical Triangle” Pattern
The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total equity market, is forming an intermediate-term “Symmetrical Triangle” pattern (see here). The price trend can be any direction leading to this pattern depending on which side to break out. The Wilshire 5000 index is below the 89-day moving average and it is in the choppy zone of the triangle 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 neutral on Friday. The LWX forecasts a bullish time-window for the next four weeks.
Broad Market Instability Index is above the Panic Threshold
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 155 on Friday. This reading is above the panic threshold level of 46, and it indicates that the current market is bearish. The BIX is plotted in the following chart as compared with the Wilshire 5000 index.
S&P 500 Index Derailed from the “Three-Peaks and a Domed House” Pattern
As affected by Super Committee failure last week, the S&P 500 index derailed from the “Three-Peaks and a Domed House” pattern as shown in the chart below. The S&P 500 index returned into the “Basement” territory and it is not on track with the model. Tracking the S&P 500 index with this pattern is terminated.
Gold is in the “Plunge” Phase
The gold index is still in the “Plunge” phase of the “Three-Peaks and a Domed House” pattern. But the time-window is going to run out for the “Plunge” phase.
Gold is in “Bump-and-Run Reversal Top” Pattern
The gold index is forming an intermediate-term “Bump-and-Run Reversal Top” pattern and it now is in the “Bump” phase. The next target prices: 1) 1550 at the Lead-in Trend Line, and 2) 1380 at the Target Line.
Silver is in the “Run” Phase with “Dead-Cat Bounce”
The silver index is still in the “Run” phase of the “Bump-and-Run Reversal Top” pattern. After a “Dead-Cat Bounce”, silver should be in a post-bounce decline driving prices gradually lower. The last price target is project at 23 on the third target line, which is close to the price level when this pattern originally started on the left side of the following chart.
U.S. Dollar is Breaking to the Upside of the “Symmetrical Triangle” Pattern
The US dollar index is breaking to the upside of the 11-month “Symmetrical Triangle” pattern (see here).
U.S. Treasury Bond is Forming a Horizontal Channel
The 30-Year US Treasury Bond index is forming a horizontal channel pattern (trading range).
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 Bond, oil and the US dollar are outperforming. Food and equity 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 5.60% below the EMA89. Outperforming sectors are Utilities (-1.61%), pharmaceuticals (-2.50%), and Consumer Goods (-3.30%). Underperforming sectors are Banks (-13.63%), Materials (-10.17%), and Financials (-9.26%). The Dow Jones Industrial Average (-3.74%) is outperforming the market, and the Russell 2000 Small-cap (-7.86%) is underperforming.
BRIC Stock Market Performance Ranking with Brazilian Market Lagging
The table below is the percentage change of the BRIC stock market indexes against the 89-day exponential moving average (EMA89). The Brazilian market is outperforming the US market, and the Russian, India, and Chinese markets are underperforming the US market
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