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05/14/2017 – Market Update

May 15, 2017 Leave a comment

 

Watch for Volatility

 

Readings of our Broad Market Instability Index danced around the panic threshold, and the stock market momentum stayed in the negative territory last week. Crude oil, gold, and the US dollar started to 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

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 47 on Friday 5/12/2017 (up from 21 the previous week) which is above the panic threshold level of 42 and indicates a bearish 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 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: downward
Date of Next Cycle Low: 5/25/2017
Broad Market Instability Index (BIX): 47, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)

 


 
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 2.05% above the EMA89. Outperforming sectors are Internet (7.13%), Technology (7.13%), and Semiconductors (5.89%). Underperforming sectors are Oil Equipment (-7.43%), Telecommunication (-4.82%), and Energy (-3.57%).
 

 

 
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.

 


 
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.

 


 
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 bounced off the lower boundary of the wedge last week. 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. Last week the index bounced after it found 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. The index bounced after it found 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.
 
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