Home > News > 12/17/2017 – Market Update

12/17/2017 – Market Update

December 18, 2017 Leave a comment Go to comments

 

Tech and Small-Cap Stocks Regaining Momentum

 

The general stock market closed higher last Friday after it was in a choppy market in a week. The technology sector and the Russell 2000 Small Cap index started regaining momentum to the upside from their recent sharp pullback. The major stock market indexes still behave out of sync with each other. It looks like that tech stocks and small-cap stocks are setting up for a potential rally as “January Effect” but it may cost a pullback from the Dow and S&P 500. The overall market would turn out to be a choppy mode heading into the end of the year. The broad stock market is projected to be in a short-term bearish time-window until 1/8/2018.

 
Table of Contents


 

 

 
Broad Market Turning into Short-Term Bearish Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 7 on Friday 12/15/2017 (up from 6 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 1/8/2018. (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: peak
Date of Next Cycle Low: 1/8/2018
Broad Market Instability Index (BIX): 7, below the panic threshold (bullish)
Momentum Indicator: 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 4.39% above the EMA89. Outperforming sectors are Home Construction (12.16%), Banks (6.94%), and Telecommunication (6.22%). Underperforming sectors are Precious Metals (-3.75%), Wireless Communication (-2.69%), and Oil Equipment (-2.22%).
 

 

 
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 a near 2-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 abc.

 


 
India Bombay Index Forming 2-Month Descending Broadening Triangle Pattern


 

The India Bombay Stock Exchange 30 Sensex index is forming a 2-month descending broadening triangle pattern. Prices become volatile inside the triangle before next breakout from the triangle.

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index is forming an 1.5-month falling wedge pattern. It is bearish as long as prices stay below the upper boundary of the wedge.

 


 
US Treasury Bond Forming 2-Month Rising Wedge Pattern


 

The 30-year U.S. treasury bond index is forming a 2-month rising wedge pattern. It is neutral before prices break out from the wedge.

 


 
US Dollar in 4.5-Month Uptrend Channel


 

The U.S. dollar index is forming a 4.5-month uptrend channel. Prices bounced off the lower boundary of the channel last week. It is bullish as long as prices stay above the lower boundary of the channel.

 


 
Gold Forming 4-Month Falling Wedge Pattern


 

The gold index is forming a 4-month falling wedge. It is bearish as long as prices stay below the upper boundary of the wedge.

 

 
Silver Forming 4-Month Downtrend Channel Pattern


 

The silver index is forming a 4-month downtrend channel pattern. It is bearish as long as prices stay below the upper boundary of the channel. Currently prices bounced off the lower boundary of the channel.

 

 
Crude Oil Forming Bullish 4-Month Uptrend Channel


 

Crude oil index is forming a 4-month bullish uptrend channel. It is bullish as long as prices stay above the lower boundary of the channel. Currently prices are in a consolidation.

 


 
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 gold is underperforming.
 
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