04/16/2017 – Market Update
Stock Market Negative Momentum
The S&P 500 index closed at a two-month low last Thursday with negative momentum, and started an intermediate downward wave. Breaking below the level of 2330, the SPX may find a support around 2290. Gold, silver, and precious metal stocks have been strengthened. The 30-year US Treasury Bond is going to test the resistance level of 153 for a potential upside breakout. The broad stock market is projected to be in a short-term bearish time-window until 4/28/2017.
Table of Contents
- Broad Market in Short-Term Bearish Time-Window
- Sector Performance Ranking with Home Construction Sector Leading
- S&P 500 Index in Primary Corrective Wave C
- 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 5-Month Falling Wedge
- Gold Bullish Breakout from Inverse Head-and-Shoulders Pattern
- Silver Bullish Breakout from Inverse Head-and-Shoulders Pattern
- Crude Oil Reached the Upside Price Target
- Asset Class Performance Ranking with Gold Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 27 on Thursday 4/13/2017 (up from 9 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 4/28/2017. (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: downward
Date of Next Cycle Low: 4/28/2017
Broad Market Instability Index (BIX): 27, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)
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 0.72% above the EMA89. Outperforming sectors are Home Construction (8.05%), Precious Metals (4.92%), and Wireless Communication (3.88%). Underperforming sectors are Banks (-3.23%), Energy (-2.83%), and Oil Equipment (-2.63%).
S&P 500 Index Starting Primary Wave C
The following chart is a 3-year weekly chart of the S&P index. The SPX has formed a potential expended flat pattern with [A]–[B]–[C] primary corrective waves. Upward wave [B] becomes an over 1-year uptrend channel with (A)–(B)–(C) intermediate waves, and it runs 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. Intermediate upward wave (C) ended, and downward intermediate wave (1) started which is the beginning of downward primary wave [C]. The short-term downside price target for wave (1) is projected around 2275 near the lower boundary of the channel.
Currently prices pulled back from the upper boundary of the channel for a consolidation. Intermediate upward wave (C) ended, and downward intermediate wave (1) started which is the beginning of downward primary wave [C]. The short-term downside price target for wave (1) is projected around 2275 near the lower boundary of the channel.
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. Upward primary wave [B] has developed with (A)–(B)–(C) intermediate waves. And now upward intermediate wave (C) is ending. 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 index reached the upper boundary of the wedge. Now it pulled back from the upper boundary.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index has formed a rising wedge. 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.
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 German 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. Now prices are testing the upper horizontal boundary of the triangle. If prices break above the upper boundary, the upside price target is projected at 157. However, the performance of this pattern usually is poor, and the average rise is meager.
US Dollar Forming 5-Month Falling Wedge
The U.S. dollar index is forming a 5-month falling wedge pattern. It is neutral before prices break out from the wedge.
Gold Forming Inverse Head-and-Shoulders Pattern
The gold index formed an inverse head-and-shoulders pattern. Recently prices have broken above the neckline. The upside price target is projected 1370.
Silver Forming Inverse Head-and-Shoulders Pattern
The silver index formed an inverse head-and-shoulders pattern. Last week prices breached the neckline. This pattern is potentially bullish. If prices stay above the neckline, the upside price target would be projected at 20.
Crude Oil Reached the Upside Price Target
After prices broke above the neckline of a short-term “W” pattern, the crude oil advanced sharply. It has passed our price target of 50.75. Now it is in consolidation.
Asset Class Performance Ranking with Gold Leading
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently gold is outperforming and copper is underperforming.
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