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06/18/2017 – Market Update

June 19, 2017 Leave a comment

 

Stocks Momentum Weakening

 

Our Broad Market Instability Index started to jump up last week, and the momentum of the stock market weakened. Crude oil, gold, and silver slid down further last week, and they are expected to bounce possibly around the middle of this week. The 30-year U.S. Treasury Bond breached the upper boundary of its inverted roof pattern which may have a tricky move in the price. The broad stock market is projected to be in a short-term bearish time-window until 6/27/2017.

 
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 23 on Friday 6/16/2017 (up from 8 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 6/27/2017. (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: 6/27/2017
Broad Market Instability Index (BIX): 23, below the panic threshold (bullish)
Momentum Indicator: slightly 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 2.37% above the EMA89. Outperforming sectors are Home Construction (6.00%), Utilities (4.84%), and Industrials (4.24%). Underperforming sectors are Oil Equipment (-7.36%), Precious Metals (-4.75%), and Energy (-3.68%).
 

 

 
S&P 500 Index in Primary Wave B

 

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 rising wedge with (A)–(B)–(C) intermediate waves, and it runs beyond the beginning of downward wave [A] as an expanded flat. The index is bullish as long as prices stay above the lower boundary of the 15-month-long rising wedge, except a bearish bias for a potential downward breakout.

 


 
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 4.5-Month Bullish Uptrend Channel

 

The India Bombay Stock Exchange 30 Sensex index is forming a 4.5-month bullish uptrend channel. The index has bounced off the upper boundary of the channel last week.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index is forming a 1.5-month rising wedge pattern. It is neutral before prices break out from the wedge. Now prices are going to test the lower boundary of the wedge.

 


 
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 6.5-Month Inverted Roof Pattern

 

The 30-year U.S. treasury bond index is forming a 6.5-month inverted roof pattern. Last week prices breached the upper boundary of the pattern. If prices stay above the upper line, the upside price target would be projected at 160.

 


 
US Dollar Bearish in 6-Month Downtrend Channel

 

The U.S. dollar index is forming a bearish 6-month downtrend channel. Prices have bounced off the lower boundary of the channel.

 


 
Gold Forming 5.5-Month Ascending Broadening Pattern

 

The gold index is forming a 5.5-month ascending broadening wedge pattern. It also formed a partial rising which is a bearish indication for retesting the lower boundary of the wedge.

 

 
Silver forming 4-month descending triangle Pattern

 

The silver index is forming a 4-month descending triangle pattern. It also formed a partial rising which is a bearish indication for retesting the lower boundary of the triangle.

 

 
Crude Oil Forming 5-Month Descending Broadening Wedge

 

Crude oil index is forming a 5-month descending broadening wedge pattern. It is very volatile inside the wedge. The index would become bullish if it can form a partial decline before prices reach the lower boundary of the wedge.

 


 
Asset Class Performance Ranking with US Treasury Bond Leading

 

The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently U.S. Treasury Bond is outperforming and crude oil is underperforming.
 
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