Home > News > 10/04/2015 – Market Update

10/04/2015 – Market Update

 

Markets are Volatile but Range-bound

 

The general stock market returned to a choppy mode while our Broad Market Instability Index surged above the panic threshold. Crude oil and gold are waiting for a breakout from their falling wedge patterns. The 30-year US treasury bond and silver are waiting for a breakout from their symmetrical triangle patterns. The broad stock market is projected to be in a short-term neutral time-window until 10/8/2015.


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 10-2-2015

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 10-2-2015

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 193 on 10/2/2015 (up from 98 the previous week) which is above the panic threshold level of 41 and indicates a bearish market. The Wilshire 5000 index is still below its 89-day exponential moving average, and the momentum is positive. Based on the forecast of LWX, the broad stock market is in a short-term neutral time-window until 10/8/2015. (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: valley
Date of Next Cycle High: 10/19/2015
Broad Market Instability Index (BIX): 193, above the panic threshold (bearish)
Momentum Indicator: positive (bullish)

W5000 10-2-2015

 

Sector Performance Ranking with Utilities 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 3.89% below the EMA89. Outperforming sectors are Utilities (0.77%), Internet (-0.44%), and Consumer Goods (-0.77%). Underperforming sectors are Oil Equipment (-11.11%), Precious Metals (-9.40%), and Biotech (-9.28%), .

Sector 10-2-2015

 

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 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 this bear market, and it will contain an intermediate (1)(2)(3)(4)(5) sub-wave structure. Currently it is in intermediate wave (5) which is the last down leg of primary wave [A].

The S&P 500 index is also forming a 5-week horizontal channel between 1870 and 2000. Price movement is choppy inside the horizontal channel.

SPX 10-2-2015

Elliott Waves 9-25-2015

 

German DAX Index: Elliott Wave

In the following weekly chart, the German DAX index is in corrective primary wave [A] for a bear market like the SPX. Primary wave [A] has an intermediate (1)(2)(3)(4)(5) five-wave sequence. Now it is in intermediate wave (5) which is the last down leg of primary wave [A]. Intermediate wave (5) could fall to 9000.

DAX 10-2-2015 (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 10-2-2015 (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.

SSEC 10-2-2015

 

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 the Indian market is outperforming. The Chinese market is underperforming.

Global Markets 10-2-2015

 

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 10-2-2015 (Weekly)

 

US Treasury Forming 6-Month Symmetrical Triangle Pattern


The 30-year U.S. treasury bond index is forming a 6-month symmetrical triangle pattern. Price movement is choppy before a breakout from the triangle.

USB 10-2-2015

 

Gold in 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. Currently it is testing the upper boundary of the wedge. If prices break the upper boundary of the wedge, gold could have a powerful rally to 1240.

GOLD 10-2-2015

 

Silver in 2-month Symmetrical Triangle Pattern


The silver index is forming a 2-month symmetrical triangle pattern. Price movement is choppy before a breakout from the triangle.

Silver 10-2-2015

 

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.

Oil 10-2-2015

 

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 10-2-2015
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