12/26/2011
Table of Contents
- Status of Key Market Parameters
- Broad Stock Market is Looking for a Breakout
- Broad Market Instability Index is below the Panic Threshold
- Gold is Still in a “Bump-and-Run” Pattern
- Silver is Still in the “Run” Phase
- US Dollar is Forming an “Ascending Triangle” Pattern
- 30-Year US Treasury Bond is in a Trading Range
- Asset Class Performance Ranking with Oil Leading
- Sector Performance Ranking with Pharmaceuticals Sector Leading
- BRIC Stock Market Performance Ranking with All BRIC Markets Lagging
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 Looking for a Breakout
The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total equity market, has been in an intermediate-term “Symmetrical Triangle” pattern (see here). As the triangle boundaries converge, the price tested both boundaries last week. Now it is looking for a breakout from the upper boundary. Currently the Wilshire 5000 index is above the 89-day moving average and it is in the uptrend zone above the triangle 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. Based on the forecast from the LWX (see the 3rd table above), the bullish time-window could resume late this week.
Broad Market Instability Index is below the Panic Threshold
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 6 on Friday. This reading is below the panic threshold level of 46, and it indicates that the current market is bullish. The BIX is plotted in the following chart as compared with the Wilshire 5000 index.
Gold is in “Bump-and-Run Reversal Top” Pattern
The gold index is still in an intermediate-term “Bump-and-Run Reversal Top” pattern and it now comes to the late part of the “Bump” phase. If it can not hold above the Lead-in Trend Line here, gold could step into the “Run” phase and the next price target is 1400 at the 1st Target Line.
Silver is in the “Run” Phase
The silver index is still in the “Run” phase of the “Bump-and-Run Reversal Top” pattern. Silver has been a dead cat already and the downside price target is project at 25 on the third target line,
U.S. Dollar is Forming a “Ascending Triangle” Pattern
The US dollar index is forming a 12-month “Ascending Triangle” pattern (see here).
U.S. Treasury Bond is in a Trading Range
The 30-Year US Treasury Bond index is forming a horizontal channel pattern (trading range) between the upper boundary at 146 and the lower boundary at 135.
Asset Class Performance Ranking with Oil Leading
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently Oil and Bond are outperforming. Food and gold 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 2.75% above the EMA89. Outperforming sectors are Pharmaceuticals (7.47%), Utilities (5.23%), and Healthcare (4.90%). Underperforming sectors are Precious Metals (-5.79%), Materials (-0.71%), and Internet (0.32%). The Dow Jones Industrial Average (4.29%) is outperforming the market, and the NASDAQ 100 (0.50%) is underperforming.
BRIC Stock Market Performance Ranking with All BRIC Markets Lagging
The table below is the percentage change of the BRIC stock market indexes against the 89-day exponential moving average (EMA89). All BRIC markets are underperforming the US market.
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