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02/28/2016 – Market Update

February 28, 2016 Leave a comment Go to comments

 

Stock Market Drifting Up

 

The stock market was drifting up with a positive momentum last week. Crude oil has been forming a huge falling wedge with a bullish bias, and prices are approaching the upper boundary of the wedge. 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 2-26-2016

 

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 2-26-2016

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 10 on Friday 2/26/2016 (down from 15 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): 10, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 

W5000 2-26-2016


 
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 1.66% below the EMA89. Outperforming sectors are Precious Metals (22.90%), Telecommunication (6.20%), and Utilities (3.80%). Underperforming sectors are Biotech (-8.20%), Banks (-8.11%), and Oil Equipment (-6.11%).
 
Sector 2-26-2016

 

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 upward intermediate wave (4) inside downward primary wave [A]. Intermediate wave (4) is a bear market rally, and will contain a-b-c sub-waves. Now it is in upward sub-wave a (blue). Downward sub-wave b will be the next.

 

SPX 2-26-2016

 

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 2-26-2016 (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 2-26-2016 (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.

 

SSEC 2-26-2016 (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 UK market is outperforming. The Chinese market is underperforming.
 
Global Markets 2-26-2016

 

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 2-26-2016 (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 2-26-2016

 

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 2-26-2016 (Weekly)

 

Silver falling 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 falling back to the neckline.

 

Silver 2-26-2016

 

Crude Oil Forming 16-Month Falling Wedge Pattern


 

Crude oil formed a 16-month falling wedge. Prices swing inside the wedge. Currently prices are near the upper boundary of the wedge. It is bearish until prices break above the upper boundary of the wedge.

 

Oil 2-26-2016

 

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 2-26-2016

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