05/07/2017 – Market Update
Prepare for Rising Volatility
As the general stock market stayed on the high of a short-term cycle, readings of our Broad Market Instability Index crossed over the panic threshold once last week. This is a warning sign for increasing market volatility. Crude oil, gold, and silver are near a rebound. The broad stock market is projected to be in a short-term bearish time-window until 5/25/2017.
Table of Contents
- Broad Market Turning into Short-Term Bearish Time-Window
- Sector Performance Ranking with Internet 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 Forming 4-Month Ascending Broadening Pattern
- Silver Broke Below Double Top Pattern
- Crude Oil Forming 4-Month Descending Broadening Wedge
- Asset Class Performance Ranking with Equity Leading
Broad Market Turning into Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 21 on Friday 5/5/2017 (down from 24 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 slightly positive. Based on the forecast of LWX, the broad stock market is projected to be in a short-term bearish time-window until 5/25/2017. (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: peak
Date of Next Cycle Low: 5/25/2017
Broad Market Instability Index (BIX): 21, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)
Sector Performance Ranking with Internet 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 2.83% above the EMA89. Outperforming sectors are Internet (8.06%), Technology (6.86%), and Consumer Services (4.61%). Underperforming sectors are Oil Equipment (-6.70%), Telecommunication (-4.63%), and Precious Metals (-4.55%).
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.
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 2325 near the lower boundary of the channel.
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 2325 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.
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. Recently prices have broken 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. Recently prices have broken 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 German market is outperforming, and the Chinese 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 unable 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. Prices reached the lower boundary of the wedge. It is neutral before prices break out from the wedge.
Gold Forming 4-Month Ascending Broadening Pattern
The gold index is forming a 4-month ascending broadening wedge pattern. Now prices are near the lower boundary of the wedge. The index would bounce if prices find a support at the lower boundary of the wedge.
Silver Broke Below Double Top Pattern
The silver index formed a 3-month double top pattern, and prices broke below the neckline. Prices may find a support near 15.8. Silver seems more weaker than gold.
Crude Oil Forming 4-Month Descending Broadening Wedge
Crude oil index is forming a 4-month descending broadening wedge pattern. Prices reached the lower boundary of the wedge. The index would bounce if prices find a support near the lower boundary.
Asset Class Performance Ranking with Equity Leading
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently equity is outperforming and crude oil is underperforming.
Comments (0)
Trackbacks (0)
Leave a comment
Trackback
