All major stock market indexes around global plummet. The Broad Market Instability index surges above the panic threshold. The S&P 500 index broke downward from its 7-year rising wedge, and it turned into a primary corrective wave for a new bear market. The German DAX index also rolled over into a bear market. The Shanghai Composite index sharply broke below its 9-month trendline and a further selloff was triggered. The broad stock market is projected to be in a short-term bearish time-window until 9/3/2015.

During last 20 years, there was about 90% of chance for the S&P 500 index in a bear market when its monthly MACD histogram stayed in negative territory. The monthly chart of the S&P 500 index below shows a correspondence with negative MACD histograms for last two major bear markets (marked in light red). So far this year, the monthly MACD histogram has been in negative territory again. This is a big warning sign that a new bear market have started stealthily.

As shown in the following weekly chart, the S&P 500 index has formed a huge rising wedge since 2009. Two boundary lines of the wedge are converging to a very narrow range. On 7/26/2015, we discussed that it will be very easy for the S&P 500 index quickly to have an initial 10% drop once prices break below the lower boundary of the wedge. Last week, it finally happened! The multi-year bull market ends and a new bear market starts.

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 Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, surged to 271 on 8/21/2015 (up from 54 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 bearish time-window until 9/3/2015. (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:

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 5.75% below the EMA89. Outperforming sectors are Home Construction (6.57%), Wireless Communication (3.61%), and Utilities (1.70%). Underperforming sectors are Precious Metals (-15.74%), Energy (-14.83%), and Oil Equipment (-14.52%), .

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 8 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. The primary fifth wave with an ending diagonal implies dramatic reversal ahead. Last week, prices sharply broke below the lower boundary of the ending diagonal. Primary wave [5] ended, and primary corrective wave [A] started for a new bear market.

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

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 had an intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Last week prices went down below wave (4). Now primary wave [5] has ended, and primary corrective wave [A] has started for a new bear market.

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.

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 8-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. Also wave (B) was confined in a 7-week symmetrical triangle with lower highs and higher lows, which is a bear flag.

Last Friday prices sharply broke through the lower of the 8-month broadening wedge to the downside. Now the downside price target is projected at 2900 which is the lowest valley of the wedge pattern.

The table below is the percentage change of major global stock market indexes against the 89-day exponential moving average (EMA89). Currently Indian market is outperforming. The Russian market is underperforming.

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.

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.

The weekly chart shows that the gold index has formed a 2-year bearish downtrend channel. Although it had a big bounce last week, it will be still bearish until prices break above the upper boundary of the channel.

The silver index is forming a bearish 7-month downtrend channel. Recently it bounced off the lower boundary of the channel.

Crude oil formed an 8-month horizontal channel. Last week it broke below the lower boundary of the channel, and it is in a bearish mode.

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.