The S&P 500 index is forming a 6-week descending triangle pattern as prices are bounded by a top sloping downward line and a bottom horizontal support line at the level of 2120. Prices are waiting for a breakout but the breakout direction will highly depend on Fed’s upcoming decision on an interest rate hike. The broad stock market is projected to be in a short-term bearish time-window until 10/24/2016 and thereafter a transition to a 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 Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 34 on Friday 10/21/2016 (up from 26 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 bearish time-window until 10/24/2016. (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 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 0.21% above the EMA89. Outperforming sectors are Internet (5.58%), Oil Equipment (5.11%), and Semiconductors (4.00%). Underperforming sectors are Telecommunication (-6.32%), Precious Metals (-6.01%), and Home Construction (-5.41%).
 

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 1–2–3–4–5 sub-waves. Currently it is in downward sub-wave 3. Now the index is forming a 6-week descending triangle pattern with a horizontal support line at the level of 2120. It could break out to either upside or downside from the triangle depending on Fed’s upcoming decision on interest rates.

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.

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

Since the middle of last year, 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 the index is in a bottoming process and prices are still confined in an 8-month ascending triangle pattern. Now prices test the upper boundary of the triangle.

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 US market is underperforming.
 

In the following weekly chart, the U.S. dollar has formed a 21-month horizontal channel. The dollar is neutral in the trading range between 93 and 100 before prices break out from the channel.

The 30-year U.S. treasury bond index is forming a 17-month ascending broadening wedge pattern. Although prices bounced off the lower boundary of the wedge last week, it could be tough to reach the upper boundary of the wedge.

The gold index has broken below the lower boundary of its 8-month rising wedge pattern. Based on this bearish breakdown, the downside price target is projected at 1200.

The silver index broke below the lower boundary of its 3-month horizontal channel between 18.50 and 20.75. Based on this bearish breakdown, the downside price target is projected at 17. Please note that the price target is very near.

The crude oil is forming a 6-month ascending right triangle pattern. Last week prices bounced off the upper horizontal resistance line. A pullback is expected. We look for a partial decline.

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 gold is underperforming.