03/19/2017 – Market Update
Gold Resumed Upward Bounce as US Dollar Weakened
Gold, silver, and precious metals stocks resumed their upward bounce and formed an inverse head-and-shoulder pattern having a bullish bias as the US dollar continued to weaken. The broad stock market has been in a short-term bearish time-window for about three weeks, and now a choppy market is expected for a projected short-term neutral time-window until 3/23/2017.
Table of Contents
- Broad Market in Short-Term Neutral Time-Window
- Sector Performance Ranking with Home Construction Sector Leading
- S&P 500 Index in Primary Corrective Wave B
- German DAX Index: Elliott Wave
- India Bombay Index Forming 18-Month Rising Wedge
- Shanghai Composite Index: Intermediate-Term Pictures
- Major Global Markets Performance Ranking
- US Treasury Bond Forming 4-Month Descending Broadening Triangle
- US Dollar Forming a Potential Bump and Run Reversal Top Pattern
- Gold Forming a Potential Inverse Head-and-Shoulders Pattern
- Silver Forming a Potential Inverse Head-and-Shoulders Pattern
- Crude Oil Bearish in 18-Month Rising Wedge Pattern
- Asset Class Performance Ranking with Copper Leading
Broad Market in Short-Term Neutral Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 13 on Friday 3/17/2017 (down from 41 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 becoming positive. Based on the forecast of LWX, the broad stock market is projected to be in a short-term neutral time-window until 3/23/2017. (see the second table below).
The LWX Indicator in Last Four Weeks (Actual)
The LWX Indicator in Next Four Weeks (Forecast)
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: 3/30/2017
Broad Market Instability Index (BIX): 13, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)
Sector Performance Ranking with Home Construction 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 3.72% above the EMA89. Outperforming sectors are Home Construction (12.32%), Technology (6.55%), and Wireless (6.27%). Underperforming sectors are Energy (-3.34%), Precious Metals (-2.89%), and Oil Equipment (-2.53%).
S&P 500 Index in Primary Wave B
The following chart is a 3-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. Upward wave [B] becomes a 12-month uptrend channel, and it is running beyond the beginning of downward wave [A] as an expanded flat. Currently prices pulled back from the upper boundary of the channel for a consolidation.
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 has (A)–(B)–(C) intermediate waves. And now it is in upward intermediate wave (C). Downward primary wave [C] will be the next.
India Bombay Index Forming 18-Month Rising Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 18-month rising wedge pattern. The current upward wave is reaching the upper boundary of the wedge.
Shanghai Composite Index: Intermediate-Term Pictures
Last year upward intermediate wave (B) went nowhere and its 1–2–3–4–5 sub-waves were compressed in an 11-month shallow rising wedge pattern which is an ending diagonal according to Elliott Wave principle. It failed to break above the upper boundary of the wedge for the price target of 3650.
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). Sub-wave 5 has ended and downward intermediate wave (C) has started.
The rally started from mid January could not reach the upper boundary of the wedge, and formed a partial rising which is a bearish sign for a downward breakout from the wedge ahead.
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). Sub-wave 5 has ended and downward intermediate wave (C) has started.
The rally started from mid January could not reach the upper boundary of the wedge, and formed a partial rising which is a bearish sign for a downward breakout from the wedge ahead.
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 Indian market is outperforming, and the Russian market is underperforming.
US Treasury Bond Forming 4-Month Descending Broadening Triangle
The 30-year U.S. treasury bond index is forming a 4-month descending broadening triangle pattern. Last week prices bounced off the lower boundary of the triangle. Although prices may retest the upper boundary of the triangle, it is neutral before a breakout from the triangle.
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.
In early January prices broke below the bump trendline and formed a bearish reversal. After the decline breached the first parallel line, the index had a short-term bounce. Now a downward wave has started again, and crossed over the first parallel line. The downside price target is projected at 97 near the lead-in trendline.
In early January prices broke below the bump trendline and formed a bearish reversal. After the decline breached the first parallel line, the index had a short-term bounce. Now a downward wave has started again, and crossed over the first parallel line. The downside price target is projected at 97 near the lead-in trendline.
Gold Forming a Potential Inverse Head-and-Shoulders Pattern
The gold index is forming a potential inverse head-and-shoulders pattern. Now it is in the late part of forming the right shoulder. This pattern is potentially bullish. If prices break above the neckline, the upside price target would be projected at 1360.
Silver Forming a Potential Inverse Head-and-Shoulders Pattern
The silver index is forming a potential inverse head-and-shoulders pattern. Now it is in the late part of forming the right shoulder. This pattern is potentially bullish. If prices break above the neckline, the upside price target would be projected at 20.
Crude Oil Bearish in 18-Month Rising Wedge Pattern
The crude oil has formed a 18-month rising wedge pattern. Last week prices bounced off the lower boundary of the wedge. It is neutral before a breakout from the wedge.
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.
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