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10/22/2017 – Market Update

October 23, 2017 Leave a comment Go to comments

 

The US Dollar is Near a Key Level for Trend Changing

 

The major stock indices extend further into record territory last week besides the declining market momentum. Gold, silver, and the US treasury bonds failed to continue their rebound. The indices of the US dollar and crude oil are about to test their upper resistance levels for potential bullish breakouts. The broad stock market is projected to be in a short-term bearish time-window until 11/1/2017.

 
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 9 on Friday 10/20/2017 (down from 22 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 became negative. Based on the forecast of LWX, the broad stock market is projected to be in the bearish time-window until 11/1/2017. (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: 11/1/2017
Broad Market Instability Index (BIX): 9, below the panic threshold (bullish)
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 3.81% above the EMA89. Outperforming sectors are Home Construction (12.46%), Semiconductors (9.47%), and Banks (6.10%). Underperforming sectors are Wireless Communication (-4.75%),
Oil Equipment (-4.14%), and Telecommunication (-2.00%).
 

 

 
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. As the wedge is getting narrow and narrow, there is 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. Upward intermediate wave (C) has ended. Now it is in a sideways-wave sequence.

 


 
India Bombay Index Forming 3-Month Trading Range

 

The India Bombay Stock Exchange 30 Sensex index is forming a 3-month horizontal trading range between 31200 and 32600. It is neutral before prices break out from the range.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index is forming a 5-month ascending broadening wedge. The index is bullish as long as prices stay above 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 Brazilian market is outperforming, and the UK market is underperforming.
 


 
US Treasury Bond Broke Below 6-Month Rising Wedge Pattern

 

The 30-year U.S. treasury bond index formed a 6-month rising wedge pattern. Recently prices have broken below the lower boundary of the wedge, and become bearish. The short-term downside price target is projected at 149.

 


 
US Dollar Forming 3-Month Descending Broadening Triangle Pattern

 

The U.S. dollar index is forming a 3-month descending broadening triangle pattern. Also it is forming a 3-month inverse head-and-shoulders pattern. 94 is a resistance level as a neckline. The dollar index is likely an intermediate-term bottom process. The recent pullback has formed a partial decline or a right shoulder. The index is going to test the upper resistance. Breaking above the resistance level of 94 will be a confirmation for an intermediate-term trend change to bullish.

 


 
Gold Forming 10-Month Uptrend Channel

 

The gold index is forming a 10-month uptrend channel. Prices are pulling back towards the lower boundary of the channel. It would be a confirmation for a trend change if prices break below the lower boundary of the channel.

 

 
Silver Broke below 2.5-Month Ascending Broadening Wedge

 

The silver index formed a 2.5-month ascending broadening wedge pattern. Recently prices have broken below the lower boundary of the wedge. The downside price target is projected at 15.9.

 

 
Crude Oil Forming 9-Month Inverse Roof Pattern

 

Crude oil index is forming a 9-month inverse roof pattern which is a bullish pattern. Recently prices have pulled back from the upper resistance boundary, and formed a partial decline which is a bullish sign for a potential breakout from the upper boundary. Prices are going to test the upper resistance around 52.

 


 
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 treasury bond is underperforming.
 
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