07/02/2017 – Market Update
The General Stock Market in a Narrow Trading Range
Crude oil had a nice bounce last week while gold and silver still waited for rebound. The Wilshire 5000 index has been in a narrow horizontal trading range for a month. Our Broad Market Instability Index remained low corresponding to a choppy stock market but low volatility. The broad stock market is projected to be in a short-term neutral time-window until 7/7/2017.
Table of Contents
- Broad Market in Short-Term Neutral Time-Window
- Sector Performance Ranking with Home Construction Sector Leading
- S&P 500 Index in Primary Corrective Wave B
- German DAX Index: Elliott Wave
- India Bombay Index Forming 5-Month Bullish Uptrend Channel
- Shanghai Composite Index: Intermediate-Term Pictures
- Major Global Markets Performance Ranking
- US Treasury Bond Forming 4-Month Rising Wedge Pattern
- US Dollar Forming 4-Month Falling Wedge Pattern
- Gold Forming 2.5-Month Ascending Triangle Pattern
- Silver Forming 2.5-month Converging Triangle Pattern
- Crude Oil Forming 6-Month Descending Broadening Wedge
- Asset Class Performance Ranking with Copper Leading Leading
Broad Market in Short-Term Neutral Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 9 on Friday 6/30/2017 (down from 18 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 neutral time-window until 7/7/2017. (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: upward
Date of Next Cycle High: 7/24/2017
Broad Market Instability Index (BIX): 9, 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 1.71% above the EMA89. Outperforming sectors are Home Construction (6.01%), Biotech (5.72%), and Healthcare (4.64%). Underperforming sectors are Oil Equipment (-7.66%), Telecommunication (-4.55%), and Energy (-4.36%).
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 5-Month Bullish Uptrend Channel
The India Bombay Stock Exchange 30 Sensex index is forming a 5-month bullish uptrend channel. The index is testing the lower boundary of the channel.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 2-month rising wedge pattern. It is neutral before prices break out from the wedge. The index is bullish as long as prices stay above the lower boundary of the wedge, except a bearish bias for a potential downward breakout.
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 4-Month Rising Wedge Pattern
The 30-year U.S. treasury bond index is forming a 4-month rising wedge pattern. The index is bullish as long as prices stay above the lower boundary of the wedge, except a bearish bias for a potential downward breakout.
US Dollar Forming 4-Month Falling Wedge Pattern
The U.S. dollar index is forming a 4-month falling wedge pattern. The index is bearish as long as prices stay below the upper boundary of the wedge, except a bullish bias for a potential upward breakout. Now it is testing the lower boundary of the wedge, and is due for a rebound.
Gold Forming 2.5-Month Ascending Triangle Pattern
The gold index is forming a 2.5-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 2.5-month Converging Triangle Pattern
The silver index is forming a 2.5-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 rebounded last week, but hard to reach 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 crude oil is underperforming.
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