It raises a caution flag that the general stock market has stalled near record highs with weakening momentum for two weeks. The market is going to test whether a Santa Claus rally can occur within this week and the next week. Due to an overrun of the post-election surge already, there may be not much left for a Santa Claus rally this year. Gold hits a bump and could have a bounce if prices breach a bump trendline. The broad stock market is projected to be in a short-term neutral time-window until 1/11/2017.

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 13 on Friday 12/23/2016 (up from 11 the previous week) which is below the panic threshold level of 43 and indicates a bullish market. The Wilshire 5000 index is above the 89-day exponential moving average, and the momentum is slightly positive. Within this week and the next week, it is time to test if a Santa Claus rally can occur. Because stocks have already rallied strongly well since Donald Trump’s election, there may be not much left for a Santa rally this year. Based on the forecast of LWX, the broad stock market is projected to be in a short-term neutral time-window until 1/11/2017. (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 4.15% above the EMA89. Outperforming sectors are Banks (15.87%), Semiconductors (8.83%), and Wireless Communication (8.60%). Underperforming sectors are Precious Metals (-13.96%), Home Construction (-1.50%), and Real Estate (-0.95%).
 

The following chart is an 8-year weekly chart of the S&P index. The previous multi-year bull market from 2009 to 2015 was characterized as an upward [1]–[2]–[3]–[4]–[5] primary wave sequence.

The SPX has formed a 2-year broadening top pattern or a potential expended flat pattern with [A]–[B]–[C] primary corrective waves. Currently upward wave [B] is running beyond the beginning of downward wave [A] as in an expanded flat. Once wave [B] ends, downward primary wave [C] will start.

It raises a caution flag that prices have been in a pause near the upper boundary of the broadening pattern for two weeks. Within this week and the next week, it is time to test if a Santa Claus rally can occur. There may be not much left for a Santa rally this year because stocks have already rallied strongly well since Donald Trump’s election.

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. And now it is in upward intermediate wave (C).

The India Bombay Stock Exchange 30 Sensex index is forming a 4-month descending broadening wedge pattern. It is bearish that now prices are near the previous low again.

This year upward intermediate wave (B) has gone nowhere and its 1–2–3–4–5 sub-waves have been compressed in an 11-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). Now sub-wave 5 has ended and downward intermediate wave (C) has started.

Prices are testing the lower boundary of the wedge. A further sell-off could be triggered once a breakdown from the wedge occurs.

The table below is the percentage change of major global stock market indexes against the 89-day exponential moving average (EMA89). Currently the Japanese and Russian markets are outperforming, and the Indian and Brazilian markets are underperforming.
 

The U.S. dollar index is forming a potential Bump and Run Reversal Top pattern. Since the index broke above a 6-month uptrend channel in the middle of last month, prices have advanced sharply along a steep bump trendline as excessive speculation drives prices up in a bump phase. Now prices are reaching the second parallel line. The uptrend will continue only if prices break above the second parallel line and stay above the bump trendline.

The 30-year U.S. treasury bond index broke below a 17-month ascending broadening wedge pattern. The downside price target is projected at 147 which is the low of July.

The gold index is forming a potential Bump and Run Reversal Bottom pattern. The middle of last month, the index broke below a 3-month downtrend channel. Since then prices have declined sharply along a steep bump trendline as excessive speculation drives prices down in a bump phase. The downtrend will continue only if prices break below the second parallel line and stay below the bump trendline.

Now prices are testing the second parallel line. But please note prices are also testing the bump trendline. A bounce could occur if prices breach the bump trendline.

The silver index has formed a bearish 6-month descending broadening wedge pattern. Currently it is near the lower boundary of the wedge. It is also forming a 2-month falling wedge pattern.

The crude oil has broken above the upper horizontal resistance boundary of an 8-month ascending triangle pattern. The upside price target is projected at 63.5.

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.