Home > News > 01/08/2017 – Market Update

01/08/2017 – Market Update

 

Gold Bounced for Second Straight Week

 

Gold advanced sharply last week after it had a bullish reversal from an intermediate bump bottom. The US dollar was unable to break above the 103.5 level, and formed a bearish reversal top as prices broke below a 2.5-month bump trendline. Having a rally in the first two days in January to fully recover the loss in the last five days in December, the general stock market made slightly positive during the seven-day period of a so-called Santa Claus rally time. The broad stock market is projected to be in a short-term neutral time-window until 1/13/2017.

 
Table of Contents


 

 

 
Broad Market in Short-Term Neutral Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 4 on Friday 1/6/2017 (down from 7 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 positive.

The period within the last five days of the year and the first two in January is typical time for a Santa Claus rally. Due to an overrun of the post-election surge already, there was not much left for a Santa Claus rally this time. It just made slightly positive during the seven-day period by the rally in the first two days in January fully recovered from the loss in the last five in December. Based on the forecast of LWX, the broad stock market is projected to be in a short-term neutral time-window until 1/13/2017. (see the second table below).

 

The LWX Indicator in Last Four Weeks (Actual)
last-4-wks-lwx-1-6-2017

 

The LWX Indicator in Next Four Weeks (Forecast)
next-4-wks-lwx-1-6-2017

 

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 Low: 1/13/2017
Broad Market Instability Index (BIX): 4, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 
w5000-1-6-2017

 
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 4.09% above the EMA89. Outperforming sectors are Banks (12.20%), Oil Equipment (8.60%), and Financials (7.49%). Underperforming sectors are Precious Metals (-1.68%), Home Construction (-0.64%), and Consumer Goods (0.75%).
 
sector-1-6-2017

 

 
S&P 500 Index in Primary Wave B


 

The following chart is a 3.5-year weekly chart of the S&P index. The SPX has formed a 2-year 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 an expanded flat. Once wave [B] ends, downward primary wave [C] will start.

The SPX also formed a 2-year broadening wedge pattern. Currently prices are testing the upper boundary of the wedge.

 
spx-1-6-2017-weekly

 
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. And now it is in upward intermediate wave (C). Downward primary wave [C] will be the next.

 
dax-1-6-2017-weekly

 
India Bombay Index Bullish Breakout from Bottom


 

Last week the India Bombay Stock Exchange 30 Sensex index broke above the upper boundary of a 4-month descending broadening wedge pattern, and it became bullish. The index also further broke to the upside from a 2-month rectangle bottom or a “W” bottom, and with an upside price target projected at 27650.

 
bse-1-6-2017

 
Shanghai Composite Index: Intermediate-Term Pictures


 

Last year upward intermediate wave (B) went nowhere and its 12345 sub-waves were 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 bounced off the lower boundary of the wedge last week. But the lower boundary would get retested.

 
ssec-1-6-2017

 
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 and Japanese markets are outperforming, and the Indian and Chinese markets are underperforming.
 
global-markets-1-6-2017


 
US Dollar Forming a Potential Bump and Run Reversal Top Pattern


 

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 November, prices have advanced sharply along a steep bump trendline as excessive speculation drives prices up in a bump phase. The uptrend will continue only if prices break above the second parallel line and stay above the bump trendline. However, prices broke below the bump trendline last week after three weeks of unsuccess to break above the second parallel line. The dollar becomes bearish as long as prices stay below the bump trendline.

 
usd-1-6-2017

 
US Treasury Bond Bearish Below 17-Month Ascending Broadening Wedge


 

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.

 
usb-1-6-2017

 
Gold Forming a Potential Bump and Run Reversal Bottom Pattern


 

The gold index is forming a potential Bump and Run Reversal Bottom pattern. In the middle of November, 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. Recently prices have broken above the bump trendline with a bullish reversal. Now prices are testing the first parallel line.

 
gold-1-6-2017
 
Silver Breaking above 2-Month Falling Wedge Pattern


 

The silver index has formed a bearish 6-month descending broadening wedge pattern.
Recently prices have bounced off the lower boundary of the broadening wedge. The index is also forming a 2-month falling wedge pattern. Last week prices breached the upper boundary of the falling wedge. It would be bullish if prices stay above the falling wedge.

 
silver-1-6-2017
 
Crude Oil Broke above 8-Month Ascending Triangle 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.

 
oil-1-6-2017

 
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 and crude oil are outperforming and gold and US treasury bond are underperforming.
 
asset-1-6-2017
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