04/05/2015 – Market Update
Weakening Market
Table of Contents
- Broad Market is Getting into Short-Term Bearish Time-Window
- Sector Performance Ranking with Home Construction 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: Intermediate-Term Picture
- Major Global Markets Performance Ranking
- US Dollar in Bump Phase
- US Treasury Bond Forming 8-Month Ascending Broadening Wedge
- Gold Forming 11-Week Descending Broadening Wedge
- Silver Forming 11-Week Descending Broadening Wedge
- Crude Oil Forming 9-Month Bump and Run Reversal Bottom
- Asset Class Performance Ranking with U.S. Dollar Leading
Broad Market is Getting into Short-Term Bearish Time-Window
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 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 1.08% above the EMA89. Outperforming sectors are Home Construction (9.89%), Consumer Services (3.74%), and Wireless Communication (3.21%). Underperforming sectors are Precious Metals (-6.52%), Energy (-2.13%), and Oil Equipment (-1.97%).
S&P 500 Index in Primary Impulse Wave 5
Scenario 1
From early December to late January, the SPX 500 index was in a flat correction with intermediate corrective wave (2) having minor wave a–b–c sub-wave sequence. Now the S&P 500 index is in intermediate wave (3). Wave (3) should contain 1–2–3–4–5 minor sub-wave sequence. It is currently in minor wave 3. Minor wave 3 is a short-term upward wave, and its upside price target is projected at 2200 based on the estimation from a 0.618 extension of minor wave 1. However, this scenario would not be valid anymore if prices break below 2040.
The SPX 500 index is still in in a correction with minor wave 2 which started from the beginning of March. Minor wave 2 is in an (a)-(b)-(c) sequence. If prices break below the support level of 2040, wave (c) could go down to 2020.
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. In January prices broke above the upper boundary of the wedge. This breakout is a very bull sign for intermediate wave (3).
The upside price target is projected at 11880 based on the wedge breakout, and it serves as a price target for wave (3). This price target was reached recently, and intermediate wave (3) is near the end. Intermediate wave (4), a corrective wave, should be the next.
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 we have a bearish signal that prices broke below the Bump Trendline.
Shanghai Composite Index: Intermediate-Term Picture
Primary wave [1] contains an intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Now the Shanghai index is in intermediate wave (5) which is the final upward leg of primary wave [1].
Major Global Market Performance Ranking
US Dollar in Bump Phase
US Treasury Forming 8-Month Ascending Broadening Wedge
Gold Forming 11-Week Descending Broadening Wedge
Silver Forming 11-Week Descending Broadening Wedge
Crude Oil in 9-Month Bump and Run Reversal Bottom Pattern
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.