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10/11/2015 – Market Update

October 11, 2015 Leave a comment Go to comments

 

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


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 10-9-2015

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 10-9-2015

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:

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)

W5000 10-9-2015

 

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%), .

Sector 10-9-2015

 

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.

SPX 10-9-2015

 

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.

DAX 10-9-2015 (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 10-9-2015 (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 10-9-2015

 

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 Russian market is outperforming. The Chinese market is underperforming.

Global Markets 10-9-2015

 

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 10-9-2015 (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 10-9-2015

 

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 10-9-2015

 

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.

Silver 10-9-2015

 

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 10-9-2015

 

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.

Asset 10-9-2015
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