Home > News > 08/09/2015 – Market Update

08/09/2015 – Market Update

 

Stock Indexes Stuck in Neutral

 

The Broad Market Instability Index is above the panic threshold level. The Wilshire 5000 index is below its 89-day exponential moving average, and the momentum is in the negative territory. The broad stock market is projected to be in a short-term neutral time-window until 8/11/2015, and to turn into a short-term bullish window right after.


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 8-7-2015

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 8-7-2015

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 75 on 8/7/2015 (up from 53 the previous week) which is above the panic threshold level of 41 and indicates a bearish market. The Wilshire 5000 index is below its 89-day exponential moving average again, and the momentum is in the negative territory. Based on the forecast of LWX, the broad stock market is in a short-term neutral time-window until 8/11/2015, and will turn into a short-term bullish window right after. (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: 8/11/2015
Broad Market Instability Index (BIX): 75, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)

W5000 8-7-2015

 

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 1.11% below the EMA89. Outperforming sectors are Internet (5.07%), Wireless Communication (2.63%), and Banks (2.45%). Underperforming sectors are Precious Metals (-27.79%), Energy (-11.22%), and Oil Equipment (-10.96%).

Sector 8-7-2015

 

S&P 500 Index in Primary Impulse Wave 5


Since last October, the S&P 500 index has been in primary impulse wave [5] which contains an intermediate (1)(2)(3)(4)(5) sub-wave structure. Especially, primary wave [5] has been confined in a rising wedge for over 7 months. This rising wedge is also characterized as a Ending Diagonal.

This primary fifth wave is the final up leg of the entail bull market started from 2009, and we are approaching the end of this final up leg right before the next market collapse. Also the primary fifth wave with an ending diagonal implies dramatic reversal ahead. Once prices break below the lower boundary of the ending diagonal, primary wave [5] will end, and primary corrective wave [A] will be the next, for a new bear market to begin.

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

SPX 8-7-2015

 

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). It will end wave (5) once prices go down beyond wave (4).

DAX 8-7-2015 (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 8-7-2015 (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. In additional, the Shanghai index formed a bearish 7-month ascending broadening wedge pattern. Due to the resistance at the 89-day exponential moving average near 4100, wave (B) failed to reach the upper boundary of the wedge, and a partial rise was formed to indicat a high possibility that downward wave (C) will break below the lower boundary of the wedge. The downside price target is projected at 3200.

Recently the movement of the Chinese stock market has reduced, and the index has been confined in a small symmetric triangle. The next move depends on the direction of breakout from the triangle. The short-term bearish time-window will end by 8/11/2015. If prices break above the upper boundary of the triangle, another bounce could retest the 89-day moving average (EMA89) near 4000.

SSEC 8-7-2015

 

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 Russian market is underperforming.

Global Markets 8-7-2015

 

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

USD 8-7-2015 (Weekly)

 

US Treasury Forming Head-and-Shoulders Pattern


The 30-year U.S. treasury bond index possibly forms a 7-month head-and-shoulders pattern. Currently it looks like that it is forming a right shoulder.

USB 8-7-2015

 

Gold Bearish 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. Now it is near the target, and it could rebound at any time.

GOLD 8-7-2015

 

Silver Forming 7-Month Bearish Downtrend Channel


The silver index is forming a bearish 7-month downtrend channel.

Silver 8-7-2015

 

Crude Oil Forming 8-Month Horizontal Channel


Crude oil is forming an 8-month horizontal channel. We will see how prices act with the lower boundary of the channel.

Oil 8-7-2015

 

Asset Class Performance Ranking with US Treasury Bond Leading


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

Asset 8-7-2015
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