While the US dollar had a bearish reversal signal last week, gold and silver got bullish and broke to the upside from a falling wedge pattern and an inverted head-and-shoulders pattern respectively. Precious metal stocks have been outperforming the market. As stocks struggled to a bear market rally, the Broad Market Instability Index (BIX) crossed above the panic threshold again. Based on the forecast of the Leading-Wave Index (LWX), the broad stock market is projected to be in a short-term neutral time-window until 2/12/2016, followed by a 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 Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 85 on Friday 2/5/2016 (up from 18 the previous week) which is above the panic threshold level of 42 and indicates a bearish market. The Wilshire 5000 index is below the 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 2/12/2016 (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 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 6.82% below the EMA89. Outperforming sectors are Precious Metals (20.57%), Utilities (6.92%), and Telecommunication (6.66%). Underperforming sectors are Internet (-14.52%), Biotech (-14.43%), and Home Construction (-12.85%).
 

Since last August, the S&P 500 index has been in 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 should contain an intermediate (1)–(2)–(3)–(4)–(5) sub-wave structure. Currently it is in intermediate downward wave (3) inside primary wave [A].

Intermediate wave (3) is a relative big middle-term downward wave and it crossed below the August low in January. Wave (3) will have 1-2-3-4-5 sub-waves (blue). Currently, it is near the end of upward sub-wave 4 (bear market rally), and downward sub-wave 5 will be the next.

In the following weekly chart, the German DAX index is in a primary corrective [A]–[B]–[C] wave sequence. Downward primary wave [A] should have an intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Now it is in downward intermediate wave (3) of primary wave [A].

In the weekly chart, the India Bombay Stock Exchange 30 Sensex index formed a Bump-and-Run Reversal Top pattern. Early last year, the index broke below the bump trendline, and it signaled a bearish reversal. The downside price target is projected at 21000 near the Lead-in Trendline.

The chart below is a weekly chart of the Shanghai Stock Exchange Composite index. Since the middle of last 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). Currently it is in downward intermediate wave (C).

The Shanghai index also formed an 1-year Head-and-Shoulders top pattern, and broke below the neckline near the level of 3000. The downside price target is projected at 2000.

The table below is the percentage change of major global stock market indexes against the 89-day exponential moving average (EMA89). Currently the Canadian market is outperforming. The Chinese markets is underperforming.

In the following weekly chart, the U.S. dollar is forming a Bump-and-Run Reversal Top pattern. Last week prices broke below the bump trendline which is a sell signal for the dollar.

The 30-year U.S. treasury bond index formed a 9-month symmetrical triangle pattern. Recently prices broke above the upper boundary of the triangle.  This bullish breakout has an upside price target at 165.

The gold index formed an 1-year falling wedge on the weekly chart, it broke above the upper boundary of the wedge. This bullish breakout has a projected upside price target at 1300.

The silver index formed a 3-month inverted head-and-shoulders pattern.  Last week it broke above the neckline of the pattern. This bullish breakout has a projected upside price target at 15.4

Crude oil formed a 16-month falling wedge. Prices swing inside the wedge. Recently prices bounced off the lower boundary of the wedge. It is bearish until prices break above the upper boundary of the wedge.

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 crude oil is underperforming.