Archive for August 15, 2016

08/14/2016 – Market Update

August 15, 2016 Leave a comment


Bullish Signs in Chinese, Indian and German Stocks


The stock markets of China, India, and Germany developed bullish technical chart patterns. The S&P 500 index is in a drifting up mode and this mode is expected to extend into this coming week before a potential bearish reversal. The broad stock market is projected to be in a short-term bullish time-window until 8/22/2016.

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 8-12-2016


The LWX Indicator in Next Four Weeks (Forecast)
Next 4 wks LWX 8-12-2016


The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 27 on Friday 8/12/2016 (up from 18 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 bullish time-window until 8/22/2016 (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: 8/22/2016
Broad Market Instability Index (BIX): 27, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)

W5000 8-12-2016

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 3.90% above the EMA89. Outperforming sectors are Precious Metals (17.36%), Wireless Communication (10.70%), and Semiconductors (9.33%). Underperforming sectors are Utilities (0.95%), Home Construction (1.69%), and Pharmaceuticals (2.12%).
Sector 8-12-2016

S&P 500 Index in Primary Wave X


Upward primary wave [X] started in mid-February is typically 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].

Last month wave [X] broke above the upper boundary of a 3-month broadening triangle pattern. Although the upside price target may be projected at 2210, we should be aware of that this pattern has a high break even failure rate and the average rise is meager according to Thomas Bulkowski.

The status in this past week had no significant change from the previous week due to a flat market.

SPX 8-12-2016

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] have had an intermediate (1)(2)(3)(4)(5) five-wave sequence. The index is also in an 18-month bearish downtrend channel. Last week prices broke above the upper boundary of the channel. This bullish breakout changed our wave counting for intermediate wave (4)(5) as illustrated on chart. Now the index should be in upward primary wave [B] with upward intermediate wave (A).

DAX 8-12-2016 (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 broken above the upper boundary of an 18-month descending broadening wedge pattern. Based on this bullish breakout, the upside price target is projected at 29500.

BSE 8-12-2016 (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.

The index also formed a 6-month ascending triangle pattern. Prices have confined inside the triangle very well. This ascending triangle pattern is likely a bottom process. Once prices break above the upper horizontal boundary of the triangle, the up side price target is projected at 3440.

SSEC 8-12-2016

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 8-12-2016

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 8-12-2016

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. Currently it is in a downward swing inside the channel.

USB 8-12-2016

Gold Formed 6-month Rising Wedge Pattern


The gold index is forming a 6-month rising wedge. Prices are confined in the wedge before the next breakout.

GOLD 8-12-2016
Silver Forming a 6-Week Horizontal Channel


The silver index is forming a 6-week horizontal channel between 19.25 and 20.75. It is neutral before the next breakout from the trading range.

Silver 8-12-2016
Crude Oil in a Potential Bullish Inverted Bump-and-Run Pattern


After it bounced off near the parallel line of the downtrend channel, the crude oil index had an advance to the upper boundary of the downtrend channel. This pattern could be a precursor of a bullish inverted bump-and-run formation or a bump-and-run bottom.

Oil 8-12-2016

Asset Class Performance Ranking with Equity Leading


The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently equity is outperforming and crude oil is underperforming.
Asset 8-12-2016