Home > News > 03/01/2015 – Market Update

03/01/2015 – Market Update

 

Stock Market in Consolidation

 

The S&P 500 index has been topping, and it just got into the second minor wave which is a short-term corrective wave. The 30-year U.S. treasury bond and gold could rebound from their recent lows. The broad stock market is projected to be in a short-term bearish time-window until 3/13/2015.


Table of Contents



Broad Market in Short-Term Bearish Time-Window


The Leading-Wave Index (LWX) is Nu Yu’s proprietary leading indicator for US equity market. LWX>+1 indicates bullish (green); LWX< -1 indicates bearish (red); The LWX between +1 and -1 indicates neutral (yellow).

The LWX Indicator in Last Four Weeks (Actual)
Last 4 wks LWX 2-27-2015

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 2-27-2015

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 18 on 2/27/2015 (up from 8 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. Based on the forecast of LWX, the broad stock market will be in a short-term bearish time-window until 3/13/2015 (see the second table above).

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:

Short-Term Cycle: downward
Date of Next Cycle Low: 3/13/2015
Broad Market Instability Index (BIX): 18, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

W5000 2-27-2015

 

Sector Performance Ranking with Home Construction 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 3.28% above the EMA89. Outperforming sectors are Home Construction (8.94%), Wireless Communication (8.15%), and Internet (7.41%). Underperforming sectors are Oil Equipment (-4.39%), Energy (-3.16%), and Utilities (-2.30%).

Sector 2-27-2015

 

S&P 500 Index in Primary Impulse Wave 5


Currently the S&P 500 index is in primary impulse wave [5]. Ideally primary wave [5] contains an intermediate (1)(2)(3)(4)(5) sub-wave structure. This fifth primary wave will be the final upward leg of the entail bull market started from 2009, and this final leg can last several months which began from mid October of 2014 and will end sometime in 2015.

From early December to late January, the SPX 500 index was in a flat correction with intermediate corrective wave (2) having minor wave abc sub-wave sequence. Now the S&P 500 index is in intermediate wave (3). Wave (3) should contain 12345 minor sub-wave sequence. Last week minor wave 1 ended, and minor wave 2 just started. Minor wave 2 is a short-term corrective wave.

SPX Elliott Wave 2-27-2015

 

German DAX Index: Elliott Wave


In the following weekly chart, the German DAX index has been in primary impulse wave [5] since mid October. Primary wave [5] contains an intermediate (1)(2)(3)(4)(5) five-wave sequence. It is in upward wave (3).

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. Recently prices broke above the upper boundary of the wedge. This breakout is a very bull sign for intermediate wave (3).

DAX 2-27-2015 (Weekly)

 

India Bombay Stock Exchange Index in Bump Phase


In the weekly chart of the India Bombay Stock Exchange 30 Sensex index, there is a possible development of a Bump and Run Reversal Top pattern. According to Thomas Bulkowski, the Bump-and-Run Reversal Top pattern consists of three main phases:

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.

BSE 2-27-2015 (Weekly)

 

Shanghai Composite Index: Long-Term Picture


Last year the Chinese stock market phased out its years-long bear market after it completed a 5-year “Ending Diagonal” pattern. A new bull market started, and the Shanghai Stock Exchange Composite Index is in primary wave [1] which is the first upward leg of a potential multi-year bull market. Recently the Chinese stock market had an explosive advance and the Shanghai Stock Exchange Composite Index reached and past our third upside price target 3150 based on an upward breakout of the 5-year falling wedge pattern according to Bulkowski’s measure rule.

Primary wave [1] contains an intermediate (1)(2)(3)(4)(5) five-wave sequence. Now the Shanghai index is in intermediate wave (4) for a correction with a potential 30%-60% retracement of wave (3).

SSEC 2-27-2015 (Weekly)

 

Major Global Market Performance Ranking


The table below is the percentage change of major global stock market indexes against the 89-day exponential moving average (EMA89). Currently German market is outperforming. The Russian market is underperforming.

Global Markets 2-27-2015

 

US Dollar in Consolidation


In the following weekly chart, the U.S. dollar advanced above the 1st parallel line with a deep slope. Now it is in a consolidation.

USD 2-27-2015 (Weekly)

 

US Treasury Bond in Bump Phase


The following chart is a daily chart of the 30-year U.S. treasury bond index in a possible development of a Bump and Run Reversal Top pattern. The index has advanced sharply along a steep trendline since mid September of last year as excessive speculation drives prices up. Recently prices broke below the 3rd parallel line. This breakdown is a bearish reversal for the treasury bond. The downside target is the 1st parallel line.

USB 2-27-2015

 

Gold Forming Ascending Broadening Wedge


The following chart shows that the gold index formed a 17-week ascending broadening wedge pattern. Prices are typically volatile inside the wedge. No price target is projected before the next breakout.

GOLD 2-27-2015

 

Silver Forming Ascending Broadening Wedge


The silver index has also formed a 17-week ascending broadening wedge pattern. Prices are typically volatile inside the wedge. No price target is projected before the next breakout.

Silver 2-27-2015

 

Crude Oil in 6-Month Bump and Run Reversal Bottom Pattern


Crude oil is forming a 6-month Bump and Run Reversal Bottom pattern. Since late October its decline has accelerated, and reached a bump low with five times the lead-in height. Once prices cross over, the fifth parallel line becomes a buy line, according to Bulkowski on Bump-and-Run Reversal Bottoms. Recently it had a bullish reversal, and now prices are testing the fourth parallel line.

Oil 2-27-2015

 

Asset Class Performance Ranking with U.S. Dollor 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. Dollor is outperforming and crude oil is underperforming.

Asset 2-27-2015
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