Home > News > 04/12/2015 – Market Update

04/12/2015 – Market Update

 

Market Nears a Breakout

 

The S&P 500 index nears the end of a choppy mode which is confined in a 6-week symmetrical triangle pattern. Once it breaks above 2100, the S&P 500 index could make a new high at 2173. Gold and crude oil also near their bullish breakout levels. The broad stock market is projected to be in a short-term bullish time-window until 4/20/2015.


Table of Contents



Broad Market in Short-Term Bullish 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 4-10-2015

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 4-10-2015

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 2 on 4/10/2015 (down from 9 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 bullish time-window until 4/20/2015 (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: upward
Date of Next Cycle High: 4/20/2015
Broad Market Instability Index (BIX): 2, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

W5000 4-10-2015

 

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 2.38% above the EMA89. Outperforming sectors are Home Construction (6.76%), Health Care (4.99%), and Biotech (4.84%). Underperforming sectors are Precious Metals (-4.78%), Utilities (-0.96%), and Telecommunication (-0.48%).

Sector 4-10-2015

 

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. After that, the S&P 500 index is in intermediate wave (3). Wave (3) should contain 12345 minor sub-wave sequence.

Since the beginning of March, the SPX 500 index has been in another flat correction with minor wave 2. Minor wave 2 is in an (a)-(b)-(c) sequence with a symmetrical triangle pattern. Once prices break above the upper boundary of the triangle, upward minor wave 3 will be confirmed, and the upside price target is projected at 2173.

SPX 4-10-2015

 

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. 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 for intermediate wave (3) is projected at 12510 based on the 1.618 extension of intermediate wave (1).

DAX 4-10-2015 (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. Now we have a bearish signal that prices broke below the Bump Trendline.

BSE 4-10-2015 (Weekly)

 

Shanghai Composite Index: Intermediate-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. Since last summer the Chinese stock market has had an explosive advance.

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].

SSEC 4-10-2015 (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 Chinese market is outperforming. The Indian market is underperforming.

Global Markets 4-10-2015

 

US Dollar in Bump Phase


In the following weekly chart, the U.S. dollar is forming a Bump-and-Run Reversal Top pattern. Prices have advanced above the 1st parallel line with a deep slope since late last year. Now prices are above the second parallel line. The uptrend continues as long as prices stay above the Bump Trendline.

USD 4-10-2015 (Weekly)

 

US Treasury Forming 8-Month Ascending Broadening Wedge


The 30-year U.S. treasury bond index is forming an 8-month ascending broadening wedge. It is important to see if the current upward swing is able to reach the upper boundary of the wedge because a partial rising could be a bearish sign to break to the downside.

USB 4-10-2015

 

Gold Forming 2-Month Inverted Head-and-Shoulders Pattern


The gold index is forming a 2-month inverted head-and-shoulders pattern. The neckline level is at 1218. If prices break above the neckline, the upside price target would be 1270.

GOLD 4-10-2015

 

Silver Forming 2-Month Inverted Head-and-Shoulders Pattern


The silver index is forming a 2-month inverted head-and-shoulders pattern. The neckline level is at 17.3. If prices break above the neckline, the upside price target would be 18.6.

Silver 4-10-2015

 

Crude Oil in 2-Month Double Bottoms Pattern


Crude oil is forming a 3-month double bottoms pattern. If prices break above the resistance level at 54, the upside price target could be projected at 61.

Oil 4-10-2015

 

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 4-10-2015
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