Home > News > 05/03/2015 – Market Update

05/03/2015 – Market Update

 

Bearish Signs in Financial Markets

 

A bearish sign appears as the S&P 500 index nears the end of its 6-year rising wedge. The U.S. dollar has formed a bump-and-run reversal top, and the 30-Year U.S. Treasury Bond also has a bearish sign with a partial rising inside a 9-month ascending broadening wedge. The Indian stock market has formed a major bearish reversal, and the German DAX index has been in an intermediate correction. Readings of the Broad Market Instability index are rising. The broad stock market is projected to be in a short-term bearish time-window until 5/14/2015.


Table of Contents



Broad Market is 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 5-1-2015

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 5-1-2015

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 37 on 5/1/2015 (up from 12 the previous week) which is close to the panic threshold level of 42 and indicates a neutral market. Based on the forecast of LWX, the broad stock market will be in a short-term bearish time-window until 5/14/2015 (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: 5/14/2015
Broad Market Instability Index (BIX): 37, close to the panic threshold (neutral)
Momentum Indicator: negative (bearish)

W5000 5-1-2015

 

Sector Performance Ranking with Oil Equipment 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 1.57% above the EMA89. Outperforming sectors are Oil Equipment (4.97%), Precious Metals (4.38%), and Energy (3.34%). Underperforming sectors are Home Construction (-2.97%), Real Estate (-2.81%), and Utilities (-1.29%).

Sector 5-1-2015

 

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 last up leg of the entail bull market started from 2009, and this last 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)-(d)-(e) sequence within an ascending triangle pattern.

SPX 5-1-2015

The S&P 500 index has formed a 6-year rising wedge pattern on its weekly chart as shown below. The pattern is near the end, and a breakout from the wedge could happen any time from now. If prices break below the lower boundary of the wedge, the trend could change and the index may have a 10-15% correction.

SPX 5-1-2015 (Weekly)

 

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] has an intermediate (1)(2)(3)(4)(5) five-wave sequence.

Intermediate wave (3) had a very good run, but it came to the end last week. Now it is in intermediate corrective wave (4).

DAX 5-1-2015 (Weekly)

 

India Bombay Stock Exchange Index in Bump-and-Run Reversal Top Pattern


In the weekly chart, the India Bombay Stock Exchange 30 Sensex index is forming a Bump-and-Run Reversal Top pattern. Since March of 2014, the Bombay index has been in the Bump phase with a sharp trendline as excessive speculation drives prices up steeply. Prices reached a bump height with three times the lead-in height. But recently the index broke below the bump trendline, and it signaled a bearish reversal.

BSE 5-1-2015 (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 up leg of a potential multi-year bull market. Since last summer the Chinese stock market has had an explosive advance.

Primary wave [1] has an intermediate (1)(2)(3)(4)(5) five-wave sequence. Now the Shanghai index is in intermediate wave (5) which is the last upward leg of primary wave [1].

SSEC 5-1-2015 (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 5-1-2015

 

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. The uptrend continues as long as prices stay above the Bump Trendline. Now prices have broken below both the second parallel line and the bump trendline. The dollar has a bearish reversal.

USD 5-1-2015 (Weekly)

 

US Treasury Forming 9-Month Ascending Broadening Wedge


The 30-year U.S. treasury bond index is forming a 9-month ascending broadening wedge. The last upward swing was unable to reach the upper boundary of the wedge, and a partial rising was formed. It is a bearish signal to break to the downside of the wedge.

USB 5-1-2015

 

Gold Forming 3-Month Inverted Head-and-Shoulders Pattern


The gold index is forming a 3-month inverted head-and-shoulders pattern. To confirm a bullish reversal, prices need to break above the neckline.

GOLD 5-1-2015

 

Silver Forming 3-Month Inverted Head-and-Shoulders Pattern


The silver index is forming a 3-month inverted head-and-shoulders pattern. To confirm a bullish reversal, prices need to break above the neckline.

Silver 5-1-2015

 

Crude Oil Bullish Breakout from 3-Month Double Bottoms


Crude oil formed a 3-month double bottoms pattern. Prices has recently broken above the resistance level of 54. The upside price target is projected at 62.25.

Oil 5-1-2015

 

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 is outperforming and agriculture is underperforming.

Asset 5-1-2015
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