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10/11/2015 – Market Update
October 11, 2015
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Counter-Trend Rally of a Bear Market
Gold and crude oil are testing upper boundaries for a breakout from their falling wedge patterns. The stock market becomes short-term bullish but it is in a counter-trend rally of a bear market. The broad stock market is projected to be in a short-term bullish time-window until 10/19/2015.
Table of Contents
- Broad Market in Short-Term Bullish Time-Window
- Sector Performance Ranking with Internet 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 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 Gold Leading
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)
The LWX Indicator in Next Four Weeks (Forecast)
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 5 on 10/9/2015 (down from 193 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 positive. Based on the forecast of LWX, the broad stock market is in a short-term bullish time-window until 10/19/2015. (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: upword
Date of Next Cycle High: 10/19/2015
Broad Market Instability Index (BIX): 5, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)
Sector Performance Ranking with Internet 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 0.43% below the EMA89. Outperforming sectors are Internet (2.72%), Consumer Goods (2.50%), and Home Constraction (2.41%). Underperforming sectors are Biotech (-8.93%), Healthcare (-5.24%), and Pharmaceuticals (-4.01%), .
S&P 500 Index in Primary Corrective 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 for the long term.
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. Currently primary wave [A] ended as intermediate (5) was compressed.
Now it is in upward primary [B], and it will contain an intermediate (A)–(B)–(C) sub-wave structure. Intermediate (A) started.
Last week, the S&P 500 index broke above the upper boundary of a 5-week horizontal channel between 1870 and 2000. This could be a bullish sign for the S&P index.
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. Currently primary wave [A] ended as intermediate (5) was compressed.
Now it is in upward primary [B], and it will contain an intermediate (A)–(B)–(C) sub-wave structure. Intermediate (A) started.
Last week, the S&P 500 index broke above the upper boundary of a 5-week horizontal channel between 1870 and 2000. This could be a bullish sign for the S&P index.
German DAX Index: Elliott Wave
In the following weekly chart, the German DAX index has developed corrective primary wave [A] for a bear market like the SPX. Primary wave [A] had an intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Currently intermediate wave (5) has ended, and wave [B] started.
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 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. Prices broke above the upper boundary of the triangle last week. Based on this breakout, the upside price target is projected at 16.2.
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 Gold Leading
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently gold is outperforming and U.S. dollar is underperforming.
