Archive

Archive for October 3, 2016

10/02/2016 – Market Update

October 3, 2016 Leave a comment

 

October Likely to be Bearish than Bullish

 

Crude oil is around 48 where is very near a bullish breakout from a 6-month symmetrical triangle pattern. Gold is at a critical point for a potential breakdown as prices test the 9-month uptrend line around 1320. The S&P 500 index was in a choppy mode last week, and it seems more likely to move higher in the coming week. However, the market momentum is very weak with a slightly positive reading, and a potential bearish reversal top is coming. The broad stock market is projected to be in a short-term bullish time-window until 10/6/2016 and thereafter a bearish time-window through October.

 
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-9-30-2016

 

The LWX Indicator in Next Four Weeks (Forecast)
next-4-wks-lwx-9-30-2016

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 13 on Friday 9/30/2016 (up from 6 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 projected to be in a short-term bullish time-window until 10/6/2016 and thereafter a bearish time-window through October. (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: 10/6/2016
Broad Market Instability Index (BIX): 13, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 
w5000-9-30-2016

 
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 1.79% above the EMA89. Outperforming sectors are Semiconductors (9.40%), Internet (6.39%), and Oil Equipment (6.04%). Underperforming sectors are Home Construction (-3.02%), Pharmaceuticals (-2.05%), and Precious Metals (-1.78%).
 
sector-9-30-2016


 
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].

Currently the SPX is in downward primary wave [Y] and it will have an intermediate corrective (A)(B)(C) wave sequence. Now it is in downward intermediate wave (A).

Intermediate wave (A) will have 12345 sub-waves. Current upward sub-wave 2 could be a sideways market.

 
spx-9-30-2016

 
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] had an intermediate (1)(2)(3)(4)(5) five-wave sequence. Currently the index is in upward primary wave [B] which will have (A)(B)(C) intermediate waves. Now it is in downward intermediate wave (B) and it could be a sideways market.

 
dax-9-30-2016-weekly
 

India Bombay Stock Exchange Index Broke below 8-month rising wedge pattern


 

Last week the India Bombay Stock Exchange 30 Sensex index broke below the lower boundary of the 8-month rising wedge pattern. Based on this bearish breakdown, the downside price target is projected at 25740.

 
bse-9-30-2016
 

Shanghai Composite Index: Intermediate-Term Pictures


 

Since the middle of last year, 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.

Currently the index is in a bottoming process and prices are still confined in an 8-month ascending triangle pattern. The lower boundary of the triangle pattern would be a support to test.

 
ssec-9-30-2016


 
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 Japenese market is underperforming.
 
global-markets-9-30-2016


 
US Dollar in 20-Month Horizontal Channel


 

In the following weekly chart, the U.S. dollar has formed a 20-month horizontal channel. The dollar is neutral in a trading range between 93 and 100 before prices break out from the channel.

 
usd-9-30-2016

 
US Treasury Bond Forming 16-Month Ascending Broadening Wedge


 

The 30-year U.S. treasury bond index is forming a 16-month ascending broadening wedge pattern. The lower boundary of the wedge would get tested.

 
usb-9-30-2016

 
Gold Forming 8-month Rising Wedge Pattern


 

The gold index is forming an 8-month rising wedge. Prices are confined in the wedge before the next breakout. Prices are testing the lower boundary of the wedge. If the lower boundary gets broken through, the downside price target would be 1200.

 
gold-9-30-2016
 
Silver Forming 3-Month Horizontal Channel


 

The silver index is forming a 3-month horizontal channel between 18.50 and 20.75. It is neutral before prices break out from the channel.

 
silver-9-30-2016
 
Crude Oil Forming 6-Month Symmetrical Triangle Pattern


 

The crude oil is forming a 6-month symmetrical triangle pattern. Prices are testing the upper boundary of the wedge. If the upper boundary gets breached, the upside price target would be 59.

 
oil-9-30-2016

 
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 agriculture is underperforming.
 
asset-9-30-2016