Archive for July 20, 2015

07/19/2015 – Market Update

July 20, 2015 Leave a comment


Stock Markets Continue to Bounce Higher


Led by the Tokyo Nikkei index, the major world stock markets including the S&P 500 index, Shanghai index, and German DAX continue to bounce towards the upside. The gold index broke below the key support level of 1150, and a selloff was triggered. The broad stock market is projected to be in a short-term bullish time-window until 7/27/2015.

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 7-17-2015

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 7-17-2015

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 49 on 7/17/2015 (down from 74 the previous week) which is above the panic threshold level of 41 and indicates a bearish market. The Wilshire 5000 index is above its 89-day exponential moving average, and the momentum is in the positive territory. Based on the forecast of LWX, the broad stock market is in a short-term bullish time-window until 7/27/2015 (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: 7/27/2015
Broad Market Instability Index (BIX): 49, above the panic threshold (bearish)
Momentum Indicator: positive (bullish)

W5000 7-17-2015


Sector Performance Ranking with Internet 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 1.45% above the EMA89. Outperforming sectors are Internet (8.78%), Biotech (7.73%), and Banks (5.24%). Underperforming sectors are Precious Metals (-18.22%), Oil Equipment (-7.55%), and Energy (-6.87%).

Sector 7-17-2015


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 the 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 7 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 three a-b-c corrective wave sequences. 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 7-17-2015


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 7-17-2015 (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 7-17-2015 (Weekly)


Shanghai Composite Index: Intermediate-Term Picture

After it broke to the downside of the intermediate fifth-wave ending diagonal, the Shanghai Stock Exchange Composite index plunged 32% from its multi-year high. Both upward intermediate wave (5) and upward primary wave [1] have ended.

Currently the Shanghai index is in primary wave [2] which is a major correction. Primary wave [2] has an intermediate (A)(B)(C) corrective-wave sequence. One week ago, downward intermediate wave (A) ended after it reached our downside price target of 3600 and overshot to 3400.

Upward intermediate wave (B) has started for a powerful bounce. This bounce could continue until 7/27/2015. The upside price target for wave (B) is projected at 4300 based on a typical 50% retracement of wave (A). Please keep in mind that a retracement range of 38%-62% also is possible for a price range between 4100 and 4500.

In additional, the Shanghai index formed a bearish 7-month ascending broadening wedge pattern. In nature, wave (B) attempts to reach the top boundary of the wedge if it can. But the huge distance from the current level to the top needs a tremendous of money to push, in this case it needs about 4 trillion dollars based on the total Chinese market capital size. If wave (B) fails to reach the upper boundary of the wedge, a partial rising could be formed for indicating a high possibility that downward wave (C) will break below the lower boundary of the wedge.

SSEC 7-17-2015


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 Chinese market is underperforming.

Global Markets 7-17-2015


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. This year prices have advanced above the second parallel line with a deep slope. Now prices have broken below both the second parallel line and the bump trendline with a bearish reversal.

USD 7-17-2015 (Weekly)


US Treasury Bearish Below 9-Month Ascending Broadening Wedge

After it broke blow the lower boundary of its 9-month ascending broadening wedge, the 30-year U.S. treasury bond index has been in a bearish downtrend with a potential downside price target at 136. The index is also forming a bearish 3-month downtrend channel.

USB 7-17-2015


Gold Bearish Breaking below 6-Month Descending Triangle

The gold index broke below the lower boundary of a 6-month descending triangle pattern. The downside price target is projected at 1069 based on the triangle breakdown.

GOLD 7-17-2015


Silver Forming 6-Month Bearish Downtrend Channel

The silver index is forming a bearish 6-month downtrend channel.

Silver 7-17-2015


Crude Oil Bearish Below 2-Month Horizontal Channel

Crude oil is bearish below the 2-month horizontal channel. It has had a 50% retracement of its previous up leg. A bounce could be near.

Oil 7-17-2015


Asset Class Performance Ranking with US Dollar Leading

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

Asset 7-17-2015
%d bloggers like this: