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06/25/2017 – Market Update

June 25, 2017 Leave a comment

 

Stocks: Negative Momentum But Low Volatility

 

Although the stock market momentum was negative, our Broad Market Instability Index remained below the panic threshold corresponding to a choppy market but low volatility. Crude oil, gold, and silver are due for a bounce from their recent lows. 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 18 on Friday 6/23/2017 (down from 23 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 negative. 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): 18, below the panic threshold (bullish)
Momentum Indicator: slightly negative (bearish)

 


 
Sector Performance Ranking with Biotech 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 2.42% above the EMA89. Outperforming sectors are Biotech (9.00%), Healthcare (7.02%), and Internet (6.25%). Underperforming sectors are Oil Equipment (-10.20%), Energy (-5.68%), and Telecommunication (-3.88%).
 

 

 
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.

 


 
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 testing 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. One week ago prices broke above 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 2-Month Ascending Triangle Pattern

 

The gold index is forming a 2-month ascending triangle pattern. The ascending triangle is typically a bullish formation that usually forms during an uptrend as a continuation pattern or at the end of a downtrend as a reversal pattern. Breaking above the upper horizontal resistance line of the pattern will be a bullish confirmation.

 

 
Silver Forming 2-month Converging Triangle Pattern

 

The silver index is forming a 2-month converging triangle pattern. This pattern looks weaker than the price pattern of gold.

 

 
Crude Oil Forming 6-Month Descending Broadening Wedge

 

Crude oil index is forming a 6-month descending broadening wedge pattern. It becomes very volatile inside the wedge. Prices are testing the lower boundary of the wedge, and look for a rebound.

 


 
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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