Archive
01/25/2015 – Market Update
Stocks in Short-Term Bullish Time-Window
Table of Contents
- Broad Market in Short-Term Bullish Time-Window
- Sector Performance Ranking with Real Estate Sector Leading
- S&P 500 Index in Primary Impulse Wave 5
- German DAX Index: Elliott Wave
- India Bombay Stock Exchange Index in Bump Phase
- Shanghai Composite Index: Long-Term Picture
- Major Global Markets Performance Ranking
- US Dollar Overshooting Upside Price Target
- US Treasury Bond in Bump Phase
- Gold Bullish Breakout from Descending Broadening Wedge
- Silver Bullish Breakout from Descending Broadening Wedge
- GDX Gold Miners ETF Bullish Breakout from Rectangle Bottom Pattern
- Crude Oil Forming 6-Month Bump and Run Reversal Bottom
- Asset Class Performance Ranking with U.S. Treasury Leading
Broad Market in Short-Term Bullish Time-Window
Santa Claus rally failed to show within the last five days of last year and first two in this January. It is the first sign for the new year to precede a bear market. Based on the 0.16% gain of the S&P 500 index was resulted from January’s first five days of this year, it seems to be sending the signal for a weak market in 2015.
By the end of this month, we will check another important indicator, the January barometer, which uses the S&P 500 index results from the entire month of January.
The daily chart below has the Wilshire 5000 index with both the BIX and the Momentum indicators. The current market status is summarized as follows:
Sector Performance Ranking with Real Estate Sector Leading
The following table is the percentage change of sectors and major market indexes against the 89-day exponential moving average (EMA89). The Wilshire 5000 index, as an average or a benchmark of the total market, is 1.67% above the EMA89. Outperforming sectors are Real Estate (8.15%), Utilities (7.43%), and Biotech (6.71%). Underperforming sectors are Oil Equipment (-10.62%), Energy (-7.11%), and Banks (-3.17%).
S&P 500 Index in Primary Impulse Wave 5
In the intermediate level, it is now in upward wave (3). Wave (3) will likely be longer in price range than wave (1). Based on 0.618 extension of wave (1), the target of wave (3) is projected at 2225. We have two scenarios as follows.
Scenario 1
Intermediate wave (3) should have a minor 1–2–3–4–5 sub-wave sequence, and may need about three months to develop. Minor wave 1 and minor wave 2 have developed. Wave 2 is a retracement of wave 1, and it has an (a)-(b)-(c) sub-wave sequence. Now the S&P 500 index is in Minor wave 3.
From early December to mid January, the SPX 500 index was in intermediate corrective wave (2) with minor wave a–b–c sub-wave sequence. Intermediate corrective wave (2) has ended. Now it is in intermediate upward wave (3).
German DAX Index: Elliott Wave
The index also developed an 1-year broadening wedge pattern. Since wave (2) did not reach the lower boundary of the wedge, it formed a partial decline which has a bullish indication for a potential upward breakout of the wedge. Last week, prices broke above the upper boundary of the wedge. This breakout is a very bull sign for intermediate wave (3).
India Bombay Stock Exchange Index in Bump Phase
1) A lead-in phase in which a lead-in trend line connecting the lows has a slope angle of about 30 degrees. Prices move in an orderly manner and the range of price oscillation defines the lead-in height between the lead-in trend line and the first parallel line.
2) A bump phase where, after prices cross above the first parallel line, excessive speculation kicks in and the bump phase starts with fast rising prices following a sharp trend line slope with 45 degrees or more until prices reach a bump height with at least twice the lead-in height. Once the second parallel line gets crossed over, it serves as a sell line.
3) A run phase in which prices break support from the lead-in trend line in a downhill run.
Since March of 2014, the Bombay index has been in the Bump phase with a sharp trendline as excessive speculation drives prices up steeply. The index maintained above the 2nd Parallel Line. The uptrend continues as long as prices stay above the Bump Trendline. Now it resumed its uptrend above the Bump Trendline.
Shanghai Composite Index: Long-Term Picture
Primary wave [1] contains an intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Now the Shanghai index is most likely ending intermediate wave (3). The next wave (4) will be a downward wave to correct wave (3).
Major Global Market Performance Ranking
US Dollar Overshooting Upside Price Target
US Treasury Bond in Bump Phase
Gold Bullish Breakout from Descending Broadening Wedge
Silver Bullish Breakout from Descending Broadening Wedge
GDX Gold Miners ETF Bullish Breakout from Rectangle Bottom Pattern
Crude Oil in 6-Month Bump and Run Reversal Bottom Pattern
Asset Class Performance Ranking with U.S. Treasury Leading
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently U.S. treasury bond is outperforming and crude oil is underperforming.