Home > News > 07/31/2016 – Market Update

07/31/2016 – Market Update

 

SPX Extended Tight Trading Range

 

The S&P 500 index extended a tight trading range last week while momentum became negative. Prices of gold and treasury bonds turned up sharply. The broad stock market is projected to be in a short-term bearish time-window until 8/5/2016.

 
Table of Contents


 


 
Broad Market 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 7-29-2016

 

The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 7-29-2016

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 16 on Friday 7/29/2016 (up from 2 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 negative. Based on the forecast of LWX, the broad stock market is in a short-term bearish time-window until 8/5/2016 (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: downward
Date of Next Cycle Low: 8/5/2016
Broad Market Instability Index (BIX): 16, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)

 
W5000 7-29-2016

 
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 4.29% above the EMA89. Outperforming sectors are Precious Metals (20.33%), Wireless Communication (13.47%), and Semiconductors (10.69%). Underperforming sectors are Banks (1.22%), Energy (1.25%), and Consumer Services (2.87%).
 
Sector 7-29-2016


 
S&P 500 Index in Primary Wave X


 

The SPX since last August has been in a bear market with a complicate correction, potentially in a combination of complex corrective primary waves [W][X][Y]. From last August to February this year, the S&P 500 index was in corrective primary wave [W] as a flat correction with an intermediate (A)(B)(C) sub-wave structure.

Upward primary wave [X] started in mid-February. Wave [X] typically is just a wave inside the complex W-X-Y wave structure to link two corrective sequences. The next wave after wave [X] will be primary wave [Y] that should be a major downward wave as a zigzag correction, and it would be more dramatic than the flat correction of wave [W].

Since early April, wave [X] has formed a 3-month broadening triangle pattern with a series of higher highs and lower lows as a,b,c,d,and e marked on the chart. Recently prices have broke above the upper boundary of the broadening triangle. Although the upside price target may be projected at 2210, the performance of this breakout could be poor according to Thomas Bulkowski. The break even failure rate is high and the average rise is meager.

 
SPX 7-29-2016

 
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. Currently it is still in intermediate wave (4). The index is also in an 18-month bearish downtrend channel.

 
DAX 7-29-2016 (Weekly)
 

India Bombay Stock Exchange Index Bullish Breakout from 18-Month Descending Broadening Wedge Pattern


 

In the weekly chart, the India Bombay Stock Exchange 30 Sensex index has broke above the upper boundary of an 18-month descending broadening wedge pattern. Based on this breakout, the upside price target is projected at 29500.

 
BSE 7-29-2016 (Weekly)
 

Shanghai Composite Index: Intermediate-Term Pictures


 

Since last June, downward intermediate wave (A) has developed a falling wedge on the Shanghai Stock Exchange Composite index with a 12345 sub-wave sequence. Sub-wave 5 is the last downward wave of intermediate wave (A). Once wave (A) ends, upward intermediate wave (B) starts.

Now the index is forming a 6-month ascending triangle pattern. Prices are pulling back from the upper horizontal boundary of the triangle.

 
SSEC 7-29-2016


 
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 market is outperforming, and the Chinese market is underperforming.
 
Global Markets 7-29-2016


 
US Dollar in 18-Month Horizontal Channel


 

In the following weekly chart, the U.S. dollar has formed an 18-month horizontal channel. The dollar is neutral in a trading range between 93 and 100 before prices break out from the channel.

 
USD 7-29-2016

 
US Treasury Bond in 9-Month Bullish Uptrend Channel


 

The 30-year U.S. treasury bond index is forming a 9-month bullish uptrend channel.

 
USB 7-29-2016

 
Gold Formed 6-month Right Triangle Pattern


 

After it broke above the upper boundary of an 1-year falling wedge pattern on the weekly chart, the gold index advanced explosively. Then it has formed a 6-month broadening ascending right-triangle pattern. Prices typically have large swings inside the triangle before the next breakout.

 
GOLD 7-29-2016 (Weekly)
 
Silver Forming a 4-Week Horizontal Channel


 

The silver index is forming a 4-week horizontal channel between 19.25 and 20.50. It is neutral before the next breakout from the trading range.

 
Silver 7-29-2016
 
Crude Oil Broken Below 7-Week Downtend Channel


 

Last week crude oil broken below the lower boundary of a 7-week downtrend channel. The parallel line of the downtrend channel could be a support.

 
Oil 7-29-2016

 
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 7-29-2016
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s