Home > News > 05/21/2017 – Market Update

05/21/2017 – Market Update

 

Volatility Jumped Up

 

The stock market became volatile last week. Crude oil and gold rebound sharply as the US dollar had a bearish breakdown from its 6-month falling wedge pattern. The broad stock market is projected to be in a short-term bearish time-window until 5/25/2017.

 
Table of Contents


 

 

 
Broad Market in Short-Term Bearish Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 49 on Friday 5/19/2017 (up from 47 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): 49, above the panic threshold (bearish)
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 1.49% above the EMA89. Outperforming sectors are Home Construction (6.98%), Semiconductors (6.49%), and Technology (5.60%). Underperforming sectors are Oil Equipment (-5.21%), Telecommunication (-4.70%), and Energy (-2.89%).
 

 

 
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 Brazilian market is underperforming.
 


 
US Treasury Bond Forming 6-Month Broadening Wedge Pattern


 

The 30-year U.S. treasury bond index is forming a 6-month broadening wedge pattern. It recently also formed a partial decline which is a potential bullish pattern to break out from the upper boundary of the wedge.

 


 
US Dollar Bearish Breaking down from 6-Month Falling Wedge


 

The U.S. dollar index formed a 6-month falling wedge pattern. Last week prices broke below the lower boundary of the wedge. A downside price target is projected at 96.35.

 


 
Gold Forming 5-Month Ascending Broadening Pattern


 

The gold index is forming a 5-month ascending broadening wedge pattern. Recently prices found a support at the lower boundary of the wedge, and bounced sharply.

 

 
Silver forming 4-month descending triangle Pattern


 

The silver index is forming a 4-month descending triangle pattern. Recently prices bounced off the lower boundary of the triangle. Silver seems more weaker than gold.

 

 
Crude Oil Forming 5-Month Descending Broadening Wedge


 

Crude oil index is forming a 5-month descending broadening wedge pattern. The index bounced sharply 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 US dollor is underperforming.
 
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