Home > News > 03/20/2016 – Market Update

03/20/2016 – Market Update

 

Bearish Rising Wedge Extended on SPX

 

Global stocks gained last week as rising commodities prices boosted material and energy shares while the US dollar weakened. The S&P 500 index extended its short-term bearish rising wedge pattern to the fifth week, and negative divergence showed up with advanced prices and downward momentum strength. Historic data suggest a late-month weakness in March. We have mixed bullish and bearish signals which the broad market instability index is still low but the short-term time-window is projected to be bearish into April.

 
SPX 3-18-2016 (Hourly)
 
Table of Contents


 


 
Broad Market is about to be 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)
Last 4 wks LWX 3-18-2016

 

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 3-18-2016

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 9 on Friday 3/18/2016 (up from 4 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is above the 89-day exponential moving average, and the momentum is positive. Based on the forecast of LWX, the broad stock market is about to be in a short-term bearish time-window and will last until 4/8/2016 (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: peak
Date of Next Cycle low: 4/8/2016
Broad Market Instability Index (BIX): 9, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 
W5000 3-18-2016

 
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 3.33% above the EMA89. Outperforming sectors are Precious Metals (26.81%), Utilities (7.83%), and Telecommunication (7.64%). Underperforming sectors are Biotech (-7.37%), Pharmaceuticals (-2.68%), and Healthcare (-2.12%).
 
Sector 3-18-2016


 
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), and tests an upside resistance. Downward sub-wave b will be the next.

 
SPX 3-18-2016

 
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 upward intermediate wave (4). The index is also in a 14-month downtrend channel.

 
DAX 3-18-2016 (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 3-18-2016 (Weekly)
 

Shanghai Composite Index: Intermediate-Term Picture


 

The chart below is a daily 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 should have completed downward intermediate wave (C). Currently it is in upward intermediate wave (X).

Besides its 1-year Head-and-Shoulders top pattern, the Shanghai index also formed a 9-month falling wedge pattern. Currently prices approach the upper boundary of the wedge. Upward intermediate wave (X) would extend once prices break above the upper boundary of the wedge.

 
SSEC 3-18-2016

 
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 Brazilian and Russian markets are outperforming. The Japanese and Chinese markets are underperforming.
 
Global Markets 3-18-2016


 
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 3-18-2016 (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 3-18-2016

 
Gold Upside Price Target 1300


 

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.

 
GOLD 3-18-2016 (Weekly)
 
Silver in 3-Month Bullish Uptrend Channel


 

After it broke out from an inverted head-and-shoulders pattern, the silver index has formed a 3-month bullish uptrend channel.

 
Silver 3-18-2016

 
Crude Oil Price above Upper Boundary of Falling Wedge


 

Crude oil formed a 16-month falling wedge pattern. Recently prices broke above the upper boundary of the wedge. This breakout is a bull sign for the crude oil, and it should have a bullish reversal already.

 
Oil 3-18-2016

 
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 the US dollar is underperforming.
 
Asset 3-18-2016
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