11/15/2015 – Market Update
November 15, 2015
Stock Bear Market is Back
The general stock market reversed after the warning sign from the negative divergence developed between the stock market price and its momentum. Last week our Broad Market Instability index surged up above the panic threshold, and the stock market suffered its worst week since August. Downward primary wave has resumed, and it is just the first down wave of a downward 1-2-3-4-5 sub-wave sequence. The broad stock market is projected to be in a short-term bearish time-window until 11/27/2015.
Table of Contents
- Broad Market in Short-Term Bearish 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 Bearish Below 7-Month Symmetrical Triangle Pattern
- Gold in 1-Year Falling Wedge Pattern
- Silver in 4-Month Broadening Triangle Pattern
- Crude Oil in 1-Year Falling Wedge Pattern
- Asset Class Performance Ranking with US Dollar Leading
Broad Market in 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)
The LWX Indicator in Next Four Weeks (Forecast)
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, surged up and closed at 108 on 11/13/2015 (up from 24 the previous week) which is above the panic threshold level of 43 and indicates a bearish market. The Wilshire 5000 index is below its 89-day exponential moving average, and the momentum is negative. 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:
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): 108, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)
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 1.48% below the EMA89. Outperforming sectors are Internet (3.77%), Banks (1.17%), and Technology (0.55%). Underperforming sectors are Precious Metals (-10.98%), Oil Equipment (-10.03%), and Wireless Communication (-4.61%), .
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.
Upward primary wave [B] has ended, and downward primary wave [C] has started. Primary wave [C] is another down leg which will contain an intermediate (1)–(2)–(3)–(4)–(5) sub-wave structure. Now it is in downward intermediate wave (1) inside downward primary wave [C].
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.
Upward primary wave [B] has ended, and downward primary wave [C] has started. Primary wave [C] is another down leg which will contain an intermediate (1)–(2)–(3)–(4)–(5) sub-wave structure. Now it is in downward intermediate wave (1) inside downward primary wave [C].
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. After upward primary wave [B], it just stated downward primary wave [C].
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 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.
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.
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 Japanese market is outperforming. The Canadian 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. 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.
US Treasury Bearish Breakdown from 7-Month Symmetrical Triangle
The 30-year U.S. treasury bond index formed a 7-month symmetrical triangle pattern. Recently prices have broken below the lower boundary of the triangle. Based on this bearish breakdown, the downside price target is projected at 147.
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.
Silver in 4-month Broadening Triangle Pattern
The silver index is forming a 4-month broadening triangle pattern. Now prices are near the lower boundary of 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. Now it bounced off the upper boundary of the wedge.
Asset Class Performance Ranking with US Dollar 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 dollar is outperforming and crude oil is underperforming.
