08/21/2016 – Market Update
Rising Oil and Flat S&P 500
Last week crude oil advanced sharply with a bullish bump-and-run reversal bottom pattern. Now it is not far away from the projected profit-taking level around 51. The S&P 500 index has been flat for another week. Watch out for a potential bearish reversal of the SPX in this coming week. The current short-term bullish time-window for the broad stock market is projected to be ending around 8/22/2016.
Table of Contents
- Short-Term Time-Window Going to Change from Bullish to Bearish
- Sector Performance Ranking with Precious Metals Sector Leading
- S&P 500 Index in Primary Corrective Wave X
- German DAX Index: Elliott Wave
- India Bombay Stock Exchange Index Bullish Breakout from 18-Month Descending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- Major Global Markets Performance Ranking
- US Dollar in 18-Month Horizontal Channel
- US Treasury Bond in 9-Month Bullish Uptrend Channel
- Gold Formed a 7-month Rising Wedge Pattern
- Silver Forming a 7-Week Horizontal Channel
- Crude Oil in Inverted Bump-and-Run Pattern
- Asset Class Performance Ranking with Crude Oil Leading
Short-Term Time-Window Going to Change from Bullish to Bearish
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)
The LWX Indicator in Next Four Weeks (Forecast)
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 12 on Friday 8/19/2016 (down from 27 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 projected to be in a short-term bullish time-window until 8/22/2016 and thereafter to turn into a bearish time-window (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:
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 High: 8/22/2016
Broad Market Instability Index (BIX): 12, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)
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 3.49% above the EMA89. Outperforming sectors are Precious Metals (11.38%), Semiconductors (10.48%), and Oil Equipment (8.05%). Underperforming sectors are Telecommunication (-0.47%), Utilities (-0.29%), and Pharmaceuticals (1.00%).
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 market kept flat, and the status in this past week had no significant change from the previous week.
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 market kept flat, and the status in this past week had no significant change from the previous week.
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] had an intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Now the index is in upward primary wave [B] with upward intermediate wave (A).
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.
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 1–2–3–4–5 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. Last week prices broke above the upper horizontal boundary of the triangle. The upside price target is projected at 3440.
The index also formed a 6-month ascending triangle pattern. Last week prices broke above the upper horizontal boundary of the triangle. The upside price target is projected at 3440.
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 Japanese market is underperforming.
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.
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.
Gold Formed 7-month Rising Wedge Pattern
The gold index is forming a 7-month rising wedge. Prices are confined in the wedge before the next breakout.
Silver Forming a 7-Week Horizontal Channel
The silver index is forming a 7-week horizontal channel between 19.25 and 20.75. It is neutral before the next breakout from the trading range.
Crude Oil in a Bullish Inverted Bump-and-Run Pattern
The crude oil index has formed a bullish bump-and-run reversal bottom pattern. Currently it is in the run phase. The upside price target is projected at the previous high around 51. The chance to meet the price target is 68% according to Thomas Bulkowski’s study on this pattern.
Asset Class Performance Ranking with Crude Oil Leading
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently crude oil is outperforming and the US dollar is underperforming.
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