04/23/2017 – Market Update
Mixed Picture in Stock Market
The general stock market has a mixed picture with relative strong S&P 500 index and relative weak Dow Jones Industrial Average index. The daily MACD of the SPX suggests accumulation but the weekly MACD shows mark-down. The Chinese stock market has increasing risk for a significant decline as the Shanghai Stock Exchange Composite index breaks below its 15-month uptrend line. The broad stock market is projected to be in a short-term neutral time-window until 4/26/2017.
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 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 5-Month Broadening Wedge Pattern
- US Dollar Forming 5-Month Falling Wedge
- Gold Bullish Breakout from Inverse Head-and-Shoulders Pattern
- Silver in Inverse Head-and-Shoulders Pattern
- Crude Oil Pulled Back Sharply
- Asset Class Performance Ranking with Gold Leading
Broad Market in Short-Term Neutral Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 10 on Friday 4/21/2017 (down from 27 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 positive. Based on the forecast of LWX, the broad stock market is projected to be in a short-term neutral time-window until 4/26/2017. (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: 5/5/2017
Broad Market Instability Index (BIX): 10, 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 1.61% above the EMA89. Outperforming sectors are Home Construction (6.08%), Wireless Communication (4.89%), and Technology (3.88%). Underperforming sectors are Oil Equipment (-5.88%), Energy (-4.59%), and Telecommunication (-3.01%).
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 intermediate-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 intermediate-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. Last week prices broke below the lower boundary of the wedge. The intermediate-term downside price target is projected near 2830.
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. Last week prices broke below the lower boundary of the wedge. The intermediate-term downside price target is projected near 2830.
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 5-Month Broadening Wedge Pattern
The 30-year U.S. treasury bond index is forming a 5-month broadening wedge pattern. Now prices pulled back from the upper boundary. This is a potential bullish pattern if the next downward wave is not able to reach the lower boundary of the wedge.
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 Bullish Breakout from 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. Prices pulled back from the neckline. Prices need to break above the neckline in order to reach the projected upside price target at 20. Silver seems more weaker than gold.
Crude Oil Pulled Back Sharply
Crude oil index pulled back sharply after prices reached the upside price target. Currently there is no clear trading pattern for crude oil.
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 crude oil is underperforming.
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