08/13/2017 – Market Update
Market Volatility Surged to 9-Month Highs
The volatility came back to the market last week, and readings of our Broad Market Instability Index surged to 100 which is the highest level after the last November presidential election. The stock market is having mild consolidation right below record highs. The broad stock market is projected to be in a short-term bearish time-window until 8/16/2017.
Table of Contents
- Broad Market in Short-Term Bearish 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 6-Month Bullish Uptrend Channel
- Shanghai Composite Index: Intermediate-Term Pictures
- Major Global Markets Performance Ranking
- US Treasury Bond in Bullish 5-Month Uptrend Channel Pattern
- US Dollar Forming 5-Month Bearish Channel Pattern
- Gold in 5.5-Month Horizontal Trading Range
- Silver Broke above Neckline of 2-month Inverse Head-n-Shoulders Pattern
- Crude Oil Forming 7-Month Descending Broadening Wedge
- Asset Class Performance Ranking with Copper 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 100 on Friday 8/11/2017 (up from 51 the previous week) which is above the panic threshold level of 42 and indicates a bearish market. The Wilshire 5000 index is near the 89-day exponential moving average, and the momentum is negative. Based on the forecast of LWX, the broad stock market is projected to be in a short-term bearish time-window until 8/16/2017. (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: 8/16/2017
Broad Market Instability Index (BIX): 100, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)
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 0.48% above the EMA89. Outperforming sectors are Home Construction (4.78%), Biotech (2.49%), and Utilities (2.30%). Underperforming sectors are Oil Equipment (-8.37%), Energy (-4.56%), and Real Estate (-0.82%).
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 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 with downward intermediate wave (1).
India Bombay Index Broke Below 6-Month Uptrend Channel
The India Bombay Stock Exchange 30 Sensex index formed a 6-month bullish uptrend channel. Last week the index broke below the lower boundary of the channel for a bearish trend change.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index formed a 3-month uptrend channel pattern. The index is bullish as long as prices stay above the lower boundary of the channel. Now prices are testing 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 Brazilian market is outperforming, and the German 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 Forming 5-Month Bearish Channel Pattern
The U.S. dollar index is forming a 5-month bearish downtrend channel. The index is bearish as long as prices stay below the upper boundary of the channel.
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.
It is neutral before prices break out from the trading range.
Silver Broke above Neckline of 2-month Inverse Head-n-Shoulders Pattern
The silver index formed a 2-month inverse head-and-shoulders pattern. Last week prices broke above the neckline. It is bullish as long as prices stay above the neckline. The upside price target is projected at 17.9.
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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