Home > News > 06/28/2015 – Market Update

06/28/2015 – Market Update

 

Markets in Holding Mode ahead of Greek Resolution

 

The S&P 500 index and German DAX are in holding mode with the uncertainty of Greek resolution. Following the warning sign we observed from a dangerous ending diagonal pattern on the Shanghai Stock Exchange Composite index, the Chinese stock market had a 20% plunge over the last two weeks and it could decline more. The broad stock market is projected to be in a short-term neutral time-window until 7/2/2015.


Table of Contents



Broad Market in Short-Term Neutral 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 6-26-2015

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 6-26-2015

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 46 on 6/26/2015 (up from 35 the previous week) which is above the panic threshold level of 41 and indicates a bearish market. The market has become weaker than expected. Based on the forecast of LWX, the broad stock market is in a short-term neutral 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): 46, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)

W5000 6-26-2015

 

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 0.55% above the EMA89. Outperforming sectors are Biotech (5.12%), Banks (4.86%), and Home Construction (4.79%). Underperforming sectors are Precious Metals (-7.28%), Utilities (-4.87%), and Real Estate (-4.51%).

Sector 6-26-2015

 

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. Corrective intermediate wave (4) ended in the middle of June. Now it is in upward intermediate wave (5).

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

SPX 6-26-2015

 

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 it is in upward intermediate wave (5).

DAX 6-26-2015 (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 6-26-2015 (Weekly)

 

Shanghai Composite Index: Intermediate-Term Picture


The Chinese stock market was in a powerful bull market from last July to the middle of this month, and made a 7-year high since 2008. During last 11 months, the Shanghai Stock Exchange Composite index was 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 became a fifth-wave extension within a rising wedge or an ending diagonal which flashed a warning sign for a dramatic reversal ahead.

One week ago, the Shanghai index had a sharp turnaround and broke below the lower boundary of the ending diagonal. Both intermediate wave (5) and primary wave [1] have ended. Currently the Shanghai index is in primary wave [2] which is a major correction. Primary wave [2] 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 6-26-2015 (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 Japanese market is outperforming. The Russian market is underperforming.

Global Markets 6-26-2015

 

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 6-26-2015 (Weekly)

 

US Treasury Bearish Below 9-Month Ascending Broadening Wedge


The 30-year U.S. treasury bond index formed a 9-month ascending broadening wedge. Prices have broken blow the lower boundary of the wedge. The downside price target is projected at 136.

USB 6-26-2015

 

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 6-26-2015

 

Silver Forming 5-Month Descending Triangle Pattern


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

Silver 6-26-2015

 

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 61.5, the second up leg will start.

Oil 6-26-2015

 

Asset Class Performance Ranking with Agriculture Leading


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

Asset 6-26-2015
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s