Home > News > 11/13/2016 – Market Update

11/13/2016 – Market Update

November 14, 2016 Leave a comment Go to comments

 

Up Stock Market with Significant Sector Divergence

 

The election surprise and the market-reaction surprise sent the Dow Jones industrial average to record highs with its best weekly performance since December 2011. The general stock market showed a strong divergence between sector winners and losers. In post-election sector performances, banks, financials, biotech, pharmaceuticals, healthcare, industrials and materials sectors were major winners. Precious metals, utilities, real estate, and technology sectors were major losers. There is an uncomfortable sign of broadening wedge patterns with either ascending or descending developed in the charts of the treasury bond, gold/silver, and S&P 500 index. The broad stock market is projected to be in a short-term bullish time-window until 11/22/2016.

 
post-election-sector-performance
 
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-11-11-2016

 

The LWX Indicator in Next Four Weeks (Forecast)
next-4-wks-lwx-11-11-2016

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 60 on Friday 11/11/2016 (down from 137 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 positive. Based on the forecast of LWX, the broad stock market is projected to be in a short-term bullish time-window until 11/22/2016. (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: 11/22/2016
Broad Market Instability Index (BIX): 60, above the panic threshold (bearish)
Momentum Indicator: positive (bullish)

 
w5000-11-11-2016

 
Sector Performance Ranking with Banks 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 1.56% above the EMA89. Outperforming sectors are Banks (14.40%), Financials (6.22%), and Industrials (4.99%). Underperforming sectors are Precious Metals (-18.34%), Real Estate (-7.02%), and Telecommunication (-6.81%).
 
sector-11-11-2016


 
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) which will have 12345 sub-waves. Currently it is in upward sub-wave 4.

Downward intermediate wave (A) has formed a 3-month descending broadening wedge pattern. Prices are testing the upper boundary of the wedge. It is not too far to reach the previous high again once prices break above the upper boundary of the wedge. On the other side, the downside risk is to decline towards the lower boundary if the market turns around.

 
spx-11-11-2016

 
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 has been in a sideways market since August.

 
dax-11-11-2016-weekly
 

India Bombay Stock Exchange Index Bearish Below 2-Month Descending Triangle Pattern


 

The India Bombay Stock Exchange 30 Sensex index formed a 2-month descending triangle pattern bounded by a top sloping downward line and a bottom horizontal support line at the level of 27600. One week ago prices broke below the horizontal support, and the nearest downside price target was projected at 26800 based on a breakdown from the descending triangle. This price target was reached with very large swings last week. But the downside risk still remains.

 
bse-11-11-2016
 

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.

This year upward intermediate wave (B) has gone nowhere and its 12345 sub-waves have been compressed in a 10-month shallow rising wedge pattern which is an ending diagonal according to Elliott Wave principle.

This rising wedge is a bearish pattern because downward intermediate wave (C) will start once intermediate wave (B) ends. Sub-wave 5 is the last upward wave of intermediate wave (B).

 
ssec-11-11-2016


 
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 Chinese market is outperforming, and the Indian market is underperforming.
 
global-markets-11-11-2016


 
US Dollar in 22-Month Horizontal Channel


 

In the following weekly chart, the U.S. dollar has formed a 22-month horizontal channel. The dollar is neutral in the trading range between 93 and 100 before prices break out from the channel.

 
usd-11-11-2016

 
US Treasury Bond Bearish Below 17-Month Ascending Broadening Wedge


 

The 30-year U.S. treasury bond index formed a 17-month ascending broadening wedge pattern. Two weeks ago prices breached the lower boundary of the wedge. Based on this bearish breakdown, the downside price target was projected at 154. This price target was reached last week. The downside risk remains, and the next downside price target is projected at 147 which is the low in July.

 
usb-11-11-2016

 
Gold in 3-month Descending Broadening Wedge Pattern


 

The gold index has formed a 3-month descending broadening wedge pattern. Last week prices tried to break through the upper boundary of the wedge, but failed. It turned into a sharp decline. Now the downside risk remains, and the lower boundary of the wedge near 1200 will be a support to be tested.

 
gold-11-11-2016
 
Silver in 4-month Descending Broadening Wedge Pattern


 

The silver index has formed a 4-month descending broadening wedge pattern. Last week the failed rally formed a partial rising which is a very bearish sign, and it turned into a sharp decline. Now the downside risk remains, and the lower boundary of the wedge near 16.25 will be a support to be tested.

 
silver-11-11-2016
 
Crude Oil in 7-Month Ascending Triangle Pattern


 

The crude oil is forming a 7-month ascending triangle pattern. Currently prices are testing a support at 43 near the lower boundary of the triangle.

 
oil-11-11-2016

 
Asset Class Performance Ranking with Copper Leading


 

The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently copper is outperforming and crude oil is underperforming.
 
asset-11-11-2016
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s