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11/08/2015 – Market Update

November 9, 2015 Leave a comment Go to comments

 

Negative Divergence in the Stock Market

 

Although the upward primary B wave extended than expected, there is a negative divergence developed between the stock market price and its momentum. This is a warning sign that a reverse is near and the downward primary C wave is the next. The broad stock market is projected to be in a short-term bearish time-window until 11/27/2015.


Table of Contents


 


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)
Last 4 wks LWX 11-6-2015

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 11-6-2015

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 24 on 11/6/2015 (up from 16 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 negative. There is a negative divergence developed between the price and the momentum. This is an early sign that the price may be reversing. Based on the forecast of LWX, the broad stock market will be in a short-term bearish time-window until 11/27/2015. (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: downward
Date of Next Cycle Low: 11/27/2015
Broad Market Instability Index (BIX): 24, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)

W5000 11-6-2015

 

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 2.41% above the EMA89. Outperforming sectors are Internet (9.17%), Technology (6.15%), and Semiconductors (6.02%). Underperforming sectors are Precious Metals (-13.40%), Oil Equipment (-5.12%), and Utilities (-2.69%), .

Sector 11-6-2015

 

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.

SPX 11-6-2015

 

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.

DAX 11-6-2015 (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 11-6-2015 (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 is in a new 10-month Head-and-Shoulders top pattern. Right now it is forming a right shoulder. Once prices break below the neckline, the Shanghai index could fall much lower.

SSEC 11-6-2015

 

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 German market is outperforming. The Brazilian market is underperforming.

Global Markets 11-6-2015

 

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. Early his year prices have advanced above the second parallel line with a deep slope, but later prices have been below the bump trendline and the second parallel line for several months. Now it is testing the second parallel line again.

USD 11-6-2015 (Weekly)

 

US Treasury Bearish Breakdown from 7-Month Symmetrical Triangle


The 30-year U.S. treasury bond index formed a 7-month symmetrical triangle pattern. Last week prices broke below the lower boundary of the triangle. Based on this bearish breakdown, the downside price target is projected at 147.

USB 11-6-2015

 

Gold is 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. Prices are going to test the lower boundaries of both patterns.

GOLD 11-6-2015

 

Silver in 3-month Uptrend Channel


The silver index is forming a 3-month uptrend channel. Now prices are going to test the lower boundary of the channel.

Silver 11-6-2015

 

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. Now it is testing the upper boundary of the wedge.

Oil 11-6-2015

 

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.

Asset 11-6-2015
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