11/12/2017 – Market Update
Sideways Markets
The stock market moved sideways last week as the market momentum stayed in the negative territory. The US dollar, treasury bound, gold and silver were all weakening except crude oil. Gold is critical to see if its prices can hold above the 1270 level to maintain above the 11-month uptrend line. The broad stock market is projected to be in a short-term bearish time-window until 11/27/2017.
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 in Consolidation
- Shanghai Composite Index: Intermediate-Term Pictures
- Major Global Markets Performance Ranking
- US Treasury Bond above 2-Month Falling Wedge Pattern
- US Dollar Bullish above 3-Month Descending Broadening Triangle Pattern
- Gold in 11-Month Uptrend Channel
- Silver in 2.5-Month Descending Triangle Pattern
- Crude Oil Bullish above 9-Month Inverse Roof Pattern
- Asset Class Performance Ranking with Crude Oil Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 37 on Friday 11/10/2017 (down from 65 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 negative. Based on the forecast of LWX, the broad stock market is projected to be in a short-term bearish time-window until 11/27/2017. (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: 11/27/2017
Broad Market Instability Index (BIX): 37, 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 2.70% above the EMA89. Outperforming sectors are Home Construction (15.05%), Semiconductors (13.06%), and Technology (7.84%). Underperforming sectors are Wireless Communication (-9.73%), Telecommunication (-6.55%), and Precious Metals (-3.56%).
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 in Consolidation
The India Bombay Stock Exchange 30 Sensex index formed a 3-month horizontal trading range between 31200 and 32600, and prices broke above the upper resistance level of the channel. An upside price target was projected at 33800. This price target was reached last week. Now prices are in a consolidation.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 3-month rising wedge. The index is bullish as long as prices stay above the lower boundary of the wedge.
US Treasury Bond above 2-Month Falling Wedge Pattern
The 30-year U.S. treasury bond index formed a 2-month falling wedge pattern. Prices have broken above the upper boundary of the wedge. The short-term upside price target is projected at 157 as long as prices stay above the upper boundary of the wedge.
US Dollar Bullish above 3-Month Descending Broadening Triangle Pattern
The U.S. dollar index formed a 3-month descending broadening triangle pattern. Also it formed a 3-month inverse head-and-shoulders pattern. 94 was a resistance level as a neckline. Prices have broken above the the neckline recently. The dollar is bullish for an upside price target projected at 96.
Gold in 11-Month Uptrend Channel
The gold index is forming a 11-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 in 2.5-Month Descending Triangle Pattern
The silver index is forming a 2.5-month descending triangle pattern. Prices are confined inside the triangle. The direction of next breakout will determine the move of prices.
Crude Oil Bullish above 9-Month Inverse Roof Pattern
Crude oil index formed a 9-month inverse roof pattern which is a bullish pattern.
Prices have recently broken above the upper resistance boundary. The oil index is bullish for an upper price target projected at 59.8.
Prices have recently broken above the upper resistance boundary. The oil index is bullish for an upper price target projected at 59.8.
Asset Class Performance Ranking with Crude Oil Leading
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently crude oil is outperforming and US treasury bound is underperforming.
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