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02/21/2016 – Market Update

February 22, 2016 Leave a comment Go to comments

 

Stock Market Gaining Strength

 

The global stock markets turned into a positive momentum last week while gold, silver and the 30-year US treasury bond got in their consolidations. Breaking above the price level of 1940 will set the S&P 500 index into a bear market rally. Based on the forecast of the Leading-Wave Index (LWX), the broad stock market is projected to be in a short-term bullish time-window until 3/2/2016.

 

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 2-19-2016

The LWX Indicator in Next Four Weeks (Forecast)

Next 4 wks LWX 2-19-2016

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 15 on Friday 2/19/2016 (down from 46 the previous week) which is below the panic threshold level of 42 and indicates a bullish 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 bullish time-window until 3/2/2016 (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:

Short-Term Cycle: upward
Date of Next Cycle high: 3/2/2016
Broad Market Instability Index (BIX): 15, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 

W5000 2-19-2016


 
Sector Performance Ranking with Precious Metals 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 3.75% below the EMA89. Outperforming sectors are Precious Metals (24.85%), Telecommunication (5.29%), and Utilities (4.72%). Underperforming sectors are Wireless Communication (-10.51%), Banks (-10.08%), and Home Construction (-9.98%).
 
Sector 2-19-2016

 

S&P 500 Index in Primary Wave A


 

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 in downward sub-wave 5 (blue).

Once sub-wave 5 ends, downward intermediate wave (3) will end, and upward intermediate wave (4) will start. The bullish reversal last week looks like that sub-wave 5 has ended. But it is tricky here, because it can be either starting upward intermediate wave (4) (bear market rally) or a consolidation of downward sub-wave 5. It will be a key to watch if prices break above 1940 to the upside or pull back below 1820 to the downside.

 

SPX 2-19-2016

 

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] should have an intermediate (1)(2)(3)(4)(5) five-wave sequence. Now it is in downward intermediate wave (3), and it is near the end. Upward intermediate wave (4) will be the next.

 

DAX 2-19-2016 (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 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.

 

BSE 2-19-2016 (Weekly)


 
Shanghai Composite Index: Intermediate-Term Picture


 

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. Prices may pull back to retest the neckline near 3000 which is a major resistance line.

 

SSEC 2-19-2016 (Weekly)

 

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 Canadian market is outperforming. The Japanese and Chinese markets are underperforming.
 
Global Markets 2-19-2016

 

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. Recently prices broke below the bump trendline which is a sell signal for the dollar.

 

USD 2-19-2016 (Weekly)

 

US Treasury Bond Forming 9-Month Broadening Wedge


 

After an explosive advance, the 30-year U.S. treasury bond index is forming a 9-month broadening wedge pattern. Prices typically have large swings inside the wedge.

 

USB 2-19-2016

 

Gold in Consolidation after Bullish Breakout


 

After it broke above the upper boundary of an 1-year falling wedge pattern on the weekly chart, the gold index has advanced explosively. This bullish breakout has a projected upside price target at 1300. Now prices are in a consolidation.

 

GOLD 2-19-2016 (Weekly)

 

Silver in Consolidation after Price Target Reached


 

After it broke out from a 3-month inverted head-and-shoulders pattern, the silver index had an explosive advance and reached the upside price target of 15.4. Now prices are in a consolidation.

 

Silver 2-19-2016

 

Crude Oil Forming 16-Month Falling Wedge Pattern


 

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.

 

Oil 2-19-2016

 

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 crude oil is underperforming.
 
Asset 2-19-2016

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