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06/25/2017 – Market Update
June 25, 2017
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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
- Sector Performance Ranking with Biotech Sector Leading
- S&P 500 Index in Primary Corrective Wave B
- German DAX Index: Elliott Wave
- India Bombay Index Forming 4.5-Month Bullish Uptrend Channel
- Shanghai Composite Index: Intermediate-Term Pictures
- Major Global Markets Performance Ranking
- US Treasury Bond Forming 6.5-Month Inverted Roof Pattern
- US Dollar Forming Bearish 6-Month Downtrend Channel
- Gold Forming 2-Month Ascending Triangle Pattern
- Silver Forming 2-month Converging Triangle Pattern
- Crude Oil Forming 6-Month Descending Broadening Wedge
- Asset Class Performance Ranking with US Treasury Bond Leading Leading
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.
