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09/07/2015 – Market Update

September 7, 2015 Leave a comment Go to comments

 

Oversold Markets Look to Rebound

 

Although global stock markets had a volatile week, our Broad Market Instability Index actually turned much lower below the panic threshold, which is a bullish divergence for stocks. Stock markets may rebound off oversold levels for a bear market rally. It becomes attractive that crude oil is building up a bullish bias on an 1-year falling wedge chart pattern. The broad stock market is projected to be in a short-term bullish time-window until 9/25/2015.


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 9-4-2015

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 9-4-2015

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 4 on 9/4/2015 (down from 16 the previous week) which is below the panic threshold level of 41 and indicates a bullish market. The Wilshire 5000 index is still below its 89-day exponential moving average, and the momentum is negative. Based on the forecast of LWX, the broad stock market is in a short-term bullish time-window until 9/25/2015. (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: 9/25/2015
Broad Market Instability Index (BIX): 4, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)

W5000 9-4-2015

 

Sector Performance Ranking with Home Construction 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 6.51% below the EMA89. Outperforming sectors are Home Construction (2.34%), Wireless Communication (0.59%), and Internet (-2.82%). Underperforming sectors are Precious Metals (-22.06%), Materials (-11.77%), and Energy (-11.06%), .

Sector 9-4-2015

 

S&P 500 Index in Primary Corrective Wave A


After it completed the 8-month ending diagonal, the S&P 500 index has rolled into a new bear market which will have a primary corrective [A][B][C] wave sequence for the long term.

Corrective primary wave [A] is the first down leg of the new bear market, and it will contain an intermediate (1)(2)(3)(4)(5) sub-wave structure. Currently it is at the end of intermediate (3), and in a transition to intermediate (4) which is a bounce of the downtrend.

The second chat below shows the current position in a big picture.

SPX 9-4-2015

Elliott Waves

 

German DAX Index: Elliott Wave

In the following weekly chart, the German DAX index is in corrective primary wave [A] for a new bear market like the SPX. Primary wave [A] has an intermediate (1)(2)(3)(4)(5) five-wave sequence. Now intermediate (3) is ending. And it is in transitioning to intermediate (4) which is a bounce in the downtrend.

DAX 9-4-2015 (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 after prices break blow the 2nd parallel line. The downside price target is projected at 21000 near the Lead-in Trendline.

BSE 9-4-2015 (Weekly)

 

Shanghai Composite Index: Intermediate-Term Picture


Since the middle of June, the Shanghai index has been in primary wave [2] which is a major correction. Primary wave [2] has an intermediate (A)(B)(C) corrective-wave sequence. It has completed intermediate wave (A) and wave (B). Now it is in intermediate wave (C).

The Shanghai Composite index also had a downside break from a 9-month Head-and-Shoulders top pattern. Based on this breakdown, the downside price target is projected at 2600. Before it reaches to this target, prices may turn up to re-test the neckline.

SSEC 9-4-2015

 

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 Canadian market is outperforming. The Chinese market is underperforming.

Global Markets 9-4-2015

 

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 9-4-2015 (Weekly)

 

US Treasury Forming Head-and-Shoulders Pattern


The 30-year U.S. treasury bond index possibly forms a 8-month head-and-shoulders top pattern. Currently it looks like that it is forming a right shoulder.

USB 9-4-2015

 

Gold Bounced off the Low of 2-Year Bearish Downtrend Channel


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

GOLD 9-4-2015 (Weekly)

 

Silver Forming 8-Month Bearish Downtrend Channel


The silver index is forming a bearish 8-month downtrend channel. Recently it bounced off the lower boundary of the channel.

Silver 9-4-2015

 

Crude Oil Forming One-Year Falling Wedge Pattern


Crude oil formed an one-year falling wedge. It could become bullish once upward breaking from the wedge happens.

Oil 9-4-2015

 

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 9-4-2015
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