09/11/2016 – Market Update
Breakdown of Horizontal Narrow Trading Range
Last Friday the broad stock market sharply broke to the downside of the 2-month-long narrow horizontal trading range. The S&P 500 index now is in the first downward intermediate wave of another major corrective sequence. The Broad Market Instability Index jumped above the panic threshold. The broad stock market is projected to be in a short-term neutral time-window until 9/26/2016.
Table of Contents
- Broad Market in Short-Term Neutral Time-Window
- Sector Performance Ranking with Semiconductors Sector Leading
- S&P 500 Index in Primary Corrective Wave Y
- German DAX Index: Elliott Wave
- India Bombay Stock Exchange Index in 7-month rising wedge pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- Major Global Markets Performance Ranking
- US Dollar in 19-Month Horizontal Channel
- US Treasury Bond Broke below 10-Month Uptrend Channel
- Gold Formed a 7-month Rising Wedge Pattern
- Silver Forming 10-Week Horizontal Channel
- Crude Oil Forming 5-Month Symmetrical Triangle Pattern
- Asset Class Performance Ranking with Gold Leading
Broad Market in Short-Term Neutral 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)
The LWX Indicator in Next Four Weeks (Forecast)
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 43 on Friday 9/9/2016 (up from 8 the previous week) which is above the panic threshold level of 42 and indicates a bearish 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 neutral time-window until 9/26/2016 (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:
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 High: 10/6/2016
Broad Market Instability Index (BIX): 43, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)
Sector Performance Ranking with Semiconductors 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 0.30% above the EMA89. Outperforming sectors are Semiconductors (4.07%), Internet (4.00%), and Banks (3.68%). Underperforming sectors are Utilities (-3.46%), Precious Metals (-2.57%), and Telecommunication (-2.55%).
S&P 500 Index in Primary Wave Y
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].
Now the SPX is in downward intermediate wave (A) of downward primary wave [Y].
Now the SPX is in downward intermediate wave (A) of downward primary wave [Y].
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). Downward intermediate wave (B) will be the next.
India Bombay Stock Exchange Index in 7-month rising wedge pattern
The India Bombay Stock Exchange 30 Sensex index has formed a 7-month rising wedge pattern. Now prices bounced off the upper boundary of the wedge.
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.
Currently prices are testing the upper boundary of the 6-month ascending triangle pattern. If prices can hold above the upper boundary, the upside price target is projected at 3440. Otherwise, the lower boundary of the triangle pattern would be a support.
Currently prices are testing the upper boundary of the 6-month ascending triangle pattern. If prices can hold above the upper boundary, the upside price target is projected at 3440. Otherwise, the lower boundary of the triangle pattern would be a support.
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 Russian market is outperforming, and the Australia market is underperforming.
US Dollar in 19-Month Horizontal Channel
In the following weekly chart, the U.S. dollar has formed an 19-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 Broke below 10-Month Uptrend Channel
The 30-year U.S. treasury bond index broke below the lower boundary of the 10-month uptrend channel last week. Now the index becomes bearish.
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. Last week the index formed a partial rising inside the wedge which is a bearish sign for prices to retest the lower boundary of the wedge.
Silver Forming 10-Week Horizontal Channel
The silver index is forming a 10-week horizontal channel between 18.50 and 20.75. It is neutral before prices break out from the channel.
Crude Oil Forming 5-Month Symmetrical Triangle Pattern
The crude oil is forming a 5-month symmetrical triangle pattern with prices confined between two converging boundaries.
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 agriculture is underperforming.
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