02/21/2016 – Market Update
Stock Market Gaining Strength
Table of Contents
- Broad Market in Short-Term Bullish Time-Window
- Sector Performance Ranking with Precious Metals Sector Leading
- S&P 500 Index in Primary Corrective Wave A
- 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 Bond Forming 9-Month Broadening Wedge
- Gold in Consolidation after Bullish Breakout
- Silver in Consolidation after Price Target Reached
- Crude Oil in 16-Month Falling Wedge Pattern
- Asset Class Performance Ranking with Gold Leading
Broad Market in Short-Term Bullish Time-Window
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:

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%).
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.
German DAX Index: Elliott Wave
India Bombay Stock Exchange Index in Bump-and-Run Reversal Top Pattern
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.
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.
US Dollar in Bump-and-Run Reversal Top Pattern
US Treasury Bond Forming 9-Month Broadening Wedge
Gold in Consolidation after Bullish Breakout
Silver in Consolidation after Price Target Reached
Crude Oil Forming 16-Month Falling Wedge Pattern
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.