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07/30/2017 – Market Update

July 31, 2017 Leave a comment

 

Watch Out For Market Volatility Flickering Back

 

The short-term time-window of the general stock market turned from bullish to bearish last week. Readings of the Broad Market Instability index started increasing and market volatility rebounded from historic lows. We have a divergent market with strong large capital stocks and weak small capital stocks as the US dollar dipped to near 13-month lows. The wave pattern forecast suggests mild consolidation ahead for the general stock market. The broad stock market is projected to be in a short-term bearish time-window until 8/14/2017.

 
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 28 on Friday 7/28/2017 (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 negative. Based on the forecast of LWX, the broad stock market is projected to be in a short-term bearish time-window until 8/14/2017. (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: 8/14/2017
Broad Market Instability Index (BIX): 28, below the panic threshold (bullish)
Momentum Indicator: slightly 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 2.59% above the EMA89. Outperforming sectors are Internet (6.48%), Biotech (6.26%), and Home Construction (4.92%). Underperforming sectors are Oil Equipment (-2.32%), Wireless Communication (-1.12%), and Energy (-0.95%).
 

 

 
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 16-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. Recently upward intermediate wave (C) has ended. Downward primary wave [C] is starting.

 


 
India Bombay Index Forming 6-Month Bullish Uptrend Channel

 

The India Bombay Stock Exchange 30 Sensex index is forming a 6-month bullish uptrend channel. The index just bounced off the upper boundary of the channel.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index is forming a 3-month uptrend channel pattern. The index is bullish as long as prices stay above the lower boundary of the channel.

 


 
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 in Bullish 5-Month Uptrend Channel Pattern

 

The 30-year U.S. treasury bond index formed a 5-month uptrend channel pattern. The index is bullish as long as prices stay above the lower boundary of the channel.

 


 
US Dollar Broke Below 4.5-Month Falling Wedge Pattern

 

The U.S. dollar index formed a 4.5-month falling wedge pattern. Recently prices have broken below the lower boundary of the wedge. The downside price target is projected at 92.2. According to Thomas Bulkowski’s analysis on falling wedge patterns, after a downward breakout, price sometimes curls around the front of the wedge and soars upward. The busted pattern presents a profit opportunity from the long side.

 


 
Gold in 5.5-Month Horizontal Trading Range

 

The gold index is forming a 5.5-month horizontal trading range between 1200 and 1300.
It is neutral before prices break out from the trading range.

 

 
Silver Forming 4-month Bearish Downtrend Channel

 

The silver index is forming a 4-month bearish downtrend channel. Prices are approaching the upper boundary of the channel.

 

 
Crude Oil Forming 7-Month Descending Broadening Wedge

 

Crude oil index is forming a 7-month descending broadening wedge pattern. It becomes very volatile inside the wedge. Prices are approaching the upper boundary of the wedge.

 


 
Asset Class Performance Ranking with Copper Leading

 

The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently copper is outperforming and US dollar is underperforming.
 
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