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10/25/2015 – Market Update
October 26, 2015
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Stock Market at a Turning Point
Led by technology sector advance, the general stock market had a counter-trend rally of a bear market. Another downward primary wave will be the next. The broad stock market is projected to be in a short-term bearish time-window until 11/11/2015.
Table of Contents
- Broad Market at Turning into Short-Term Bearish Time-Window
- Sector Performance Ranking with Semiconductors Sector Leading
- S&P 500 Index in Primary Corrective Wave B
- German DAX Index: Elliott Wave
- India Bombay Stock Exchange Index in Bump-and-Run Reversal Top Pattern
- Shanghai Composite Index: Intermediate-Term Picture
- Major Global Markets Performance Ranking
- US Dollar in Bump-and-Run Reversal Top Pattern
- US Treasury Forming 7-Month Symmetrical Triangle Pattern
- Gold above 1-Year Falling Wedge Pattern
- Silver above 2-month Symmetrical Triangle Pattern
- Crude Oil in 1-Year Falling Wedge Pattern
- Asset Class Performance Ranking with Equity Leading
Broad Market Turning into Short-Term Bearish 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)
The LWX Indicator in Next Four Weeks (Forecast)
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 23 on 10/23/2015 (up from 3 the previous week) which is below the panic threshold level of 43 and indicates a bullish market. The Wilshire 5000 index is above its 89-day exponential moving average, and the momentum is positive. Based on the forecast of LWX, the broad stock market will be in a short-term bearish time-window until 11/11/2015. (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 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: peak
Date of Next Cycle Low: 11/11/2015
Broad Market Instability Index (BIX): 23, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)
Sector Performance Ranking with Semiconductors 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 1.74% above the EMA89. Outperforming sectors are Semiconductors (7.77%), Internet (6.45%), and Technology (5.99%). Underperforming sectors are Biotech (-4.95%), Oil Equipment (-4.58%), and Healthcare (-3.27%), .
S&P 500 Index in Primary Wave B
After it completed the 8-month ending diagonal, the S&P 500 index has rolled into a bear market which will have a primary corrective [A]–[B]–[C] wave sequence in a relative long-term time-frame.
Primary wave [A] is the first down leg of this bear market, and it contains an intermediate (1)–(2)–(3)–(4)–(5) sub-wave structure. Primary [B] is a counter-trend upward wave, and it contains an intermediate (A)–(B)–(C) sub-wave structure.
Now upward primary wave [B] is going to end, and downward primary wave [C] will start. Primary wave [C] is another down leg which will contain an intermediate (1)–(2)–(3)–(4)–(5) sub-wave structure.
Primary wave [A] is the first down leg of this bear market, and it contains an intermediate (1)–(2)–(3)–(4)–(5) sub-wave structure. Primary [B] is a counter-trend upward wave, and it contains an intermediate (A)–(B)–(C) sub-wave structure.
Now upward primary wave [B] is going to end, and downward primary wave [C] will start. Primary wave [C] is another down leg which will contain an intermediate (1)–(2)–(3)–(4)–(5) sub-wave structure.
German DAX Index: Elliott Wave
In the following weekly chart, the German DAX index is in a primary corrective [A]–[B]–[C] wave sequence. Downward primary wave [A] developed an intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Currently it is in upward primary wave [B]. Downward primary wave [C] will be the next.
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.
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.
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.
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 the Russian market is outperforming. The Chinese market is underperforming.
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.
US Treasury Forming 7-Month Symmetrical Triangle Pattern
The 30-year U.S. treasury bond index is forming a 7-month symmetrical triangle pattern. Price movement is choppy before a breakout from the triangle.
Gold is above 1-Year Falling Wedge
The weekly chart shows that the gold index has formed a 2-year bearish downtrend channel. Inside the channel, it also formed an 1-year falling wedge. One week ago, prices broke above the upper boundary of the falling wedge. The upside price is projected at the upper boundary of the downtrend channel near 1230. Prices may re-test the upper boundary of the falling wedge before reaching the price target.
Silver above 2-month Symmetrical Triangle Pattern
The silver index formed a 2-month symmetrical triangle pattern. Prices have broken above the upper boundary of the triangle. The upside price target at 16.2 was almost reached.
Crude Oil Forming One-Year Falling Wedge Pattern
Crude oil formed an one-year falling wedge. It could become bullish once prices break above the upper boundary of the wedge.
Asset Class Performance Ranking with Equity Leading
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently equity is outperforming and crude oil is underperforming.
