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
- Sector Performance Ranking with Utilities Sector Leading
- S&P 500 Index in Primary Corrective Wave A
- 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 6-Month Symmetrical Triangle Pattern
- Gold in 1-Year Falling Wedge Pattern
- Silver in 2-month Symmetrical Triangle Pattern
- Crude Oil in 1-Year Falling Wedge Pattern
- Asset Class Performance Ranking with US Treasury Bond Leading
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)
The LWX Indicator in Next Four Weeks (Forecast)
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:
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)
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%), .
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.
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.
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.
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 Indian 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 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.
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.
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.
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 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.
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