Home > News > 06/21/2015 – Market Update

06/21/2015 – Market Update

 

SPX and DAX with Elliott Wave Bullish Bias

 

The S&P 500 index (SPX) accumulates energy for next breakout while the treasury bonds build up a bullish bias. The German DAX is ending its two-month-long correction and is likely to resume its uptrend. The Chinese stock market had a dramatic bearish reversal last week, and it turns into a major correction. The broad stock market is projected to be in a short-term bullish time-window until 7/2/2015.


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 6-19-2015

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 6-19-2015

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 35 on 6/19/2015 (up from 22 the previous week) which is below the panic threshold level of 41 and indicates a bullish market. Based on the forecast of LWX, the broad stock market is in a short-term bullish time-window until 7/2/2015 (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: 7/2/2015
Broad Market Instability Index (BIX): 35, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

W5000 6-19-2015

 

Sector Performance Ranking with Biotech 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 1.13% above the EMA89. Outperforming sectors are Biotech (6.58%), Wireless Communication (5.01%), and Banks (4.45%). Underperforming sectors are Precious Metals (-6.21%), Oil Equipment (-4.49%), and Energy (-3.72%).

Sector 6-19-2015

 

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 primary fifth wave is the last up leg of the entail bull market started from 2009, and we gradually approach the end of this last up leg before the next market collapse. Any further upside push will make a major top of the market.

Primary wave [5] has been confined in a rising wedge for over 6 months. This rising wedge is also characterized as a Ending Diagonal. Since the beginning of March, it has been in corrective intermediate wave (4) with a flat correction combining two a-b-c corrective wave sequences. Last week, corrective intermediate wave (4) ended, and upward intermediate wave (5) just started.

For more information about the ending diagonal, visit: “Ending Diagonal: A Pattern That Sends Shivers Down Investors’ Spines” at Elliott Wave International.

SPX 6-19-2015

 

German DAX Index: Elliott Wave

In the following weekly chart, the German DAX index has been in impulse primary wave [5] since mid October of last year. Primary wave [5] has an intermediate (1)(2)(3)(4)(5) five-wave sequence. Now corrective intermediate wave (4) is ending, and upward intermediate wave (5) will be the next.

DAX 6-19-2015 (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 this year the index broke below the bump trendline, and it signaled a bearish reversal. The downside risk is very high for the index once prices break blow the 2nd parallel line.

BSE 6-19-2015 (Weekly)

 

Shanghai Composite Index: Intermediate-Term Picture


The Chinese stock market has been in a powerful bull market since last July, and the Shanghai Stock Exchange Composite index has been in primary wave [1] which contains an intermediate (1)(2)(3)(4)(5) five-wave sequence.

Since the beginning of this year, the index has been in intermediate wave (5). Intermediate wave (5) is the last up leg of primary wave [1]. Also this intermediate wave has become a fifth-wave extension within a rising wedge or an ending diagonal. A fifth wave extension or an ending diagonal implies dramatic reversal ahead.

Last week it sharply broke below the lower boundary of the ending diagonal, and formed a bearish reversal top. Both intermediate wave (5) and primary wave [1] have ended. Currently the Shanghai index is getting into corrective primary wave [2] which will have an intermediate (A)(B)(C) corrective-wave sequence. Now it is in the first downward wave with wave (A) of this intermediate (A)(B)(C) correction.

A downside price target for corrective primary wave [2] is projected at 3600 based on a typical 50% retracement of primary wave [1].

SSEC 6-19-2015 (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 German market is underperforming.

Global Markets 6-19-2015

 

US Dollar in Bump-and-Run Reversal Top Pattern


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 have broken below both the second parallel line and the bump trendline with a bearish reversal.

USD 6-19-2015 (Weekly)

 

US Treasury Formed 12-Weekly Falling Wedge Pattern


The 30-year U.S. treasury bond index has formed a 12-week falling wedge pattern. Now it is testing the upper boundary of the wedge. Once prices break above the upper boundary, a sharp advance could happen.

USB 6-19-2015

 

Gold Forming 5-Month Triangle Pattern


The gold index is forming a 5-month triangle pattern. Next move depends on the direction of a breakout from the triangle.

GOLD 6-19-2015

 

Silver Forming 5-Month Triangle Pattern


The silver index is forming a 5-month triangle pattern. Next move depends on the direction of a breakout from the triangle.

Silver 6-19-2015

 

Crude Oil Forming Measured Move Up Pattern


Crude oil is forming a measured move up pattern after it developed the first up leg. Now it is in consolidation. Once prices break above 61, the second up leg will start.

Oil 6-19-2015

 

Asset Class Performance Ranking with Equity Leading


The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently equity is outperforming and the US treasury bond is underperforming.

Asset 6-19-2015
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