Home > News > 12/24/2017 – Market Update

12/24/2017 – Market Update

December 25, 2017 Leave a comment Go to comments

 

Choppy Market Heading Year-End

 

The general stock market was flat with very low volatility but weakening momentum last week. Technical analysis suggests that the S&P 500 index approaches the end of its most powerful 18-month-long intermediate upward wave and will face a correction before next intermediate upward wave. The 30-year US treasury bond became very bearish as its prices broke downward from a 2-month rising wedge pattern. Gold is going to test an upper resistance for a potential breakout to the upside of a 4-month falling wedge pattern. Crude oil is still bullish with its 4-month uptrend channel. The broad stock market is most likely to continue being choppy through the end of the year, and is projected to be in a short-term neutral time-window until 1/3/2018.

 
Table of Contents


 

 

 
Broad Market in Short-Term Neutral Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 4 on Friday 12/22/2017 (down from 7 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 1/3/2018. (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: downward
Date of Next Cycle Low: 1/18/2018
Broad Market Instability Index (BIX): 4, 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 4.35% above the EMA89. Outperforming sectors are Home Construction (12.41%), Banks (7.86%), and Telecommunication (6.97%). Underperforming sectors are Utilities (-3.35%), Real Estate (-0.70%), and Wireless Communication (-0.38%).
 

 

 
S&P 500 Index in Primary Upward Wave 5


 

The chart pattern on the SPX weekly chart becomes a 2-year uptrend channel from a 2-year rising wedge, and it changes our wave count also. This uptrend channel can be counted as primer impulse wave [5] which is the last upward wave inside a multi-year primer [1][2][3][4][5] five-wave sequence started from 2009. The current primer upward wave [5] is in progress to develop an intermediate (1)(2)(3)(4)(5) five-wave sequence. We are in the middle of primer wave [5] with intermediate upward wave (3) that has developed 12345 sub-waves. Now intermediate upward wave (3) nears its end, and intermediate corrective wave (4) will be the next.

 


 
German DAX Index: Elliott Wave


 

In the following weekly chart, the German DAX index is in primer impulse wave [5] of a multi-year primer [1][2][3][4][5] five-wave sequence. Upward primer wave [5] is in progress to develop an intermediate (1)(2)(3)(4)(5) five-wave sequence. Currently it is in intermediate corrective wave (4).

 


 
India Bombay Index Broke above 2-Month Descending Broadening Triangle Pattern


 

The India Bombay Stock Exchange 30 Sensex index formed a 2-month descending broadening triangle pattern. Prices broke above the upper horizontal boundary of the triangle last week. It is bullish with an upside price target projected at 34450.

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index is forming an 1-month horizontal trading range between 3260 and 3320. It is neutral before prices break out from the range.

 


 
US Treasury Bond Broke below 2-Month Rising Wedge Pattern


 

The 30-year U.S. treasury bond index formed a 2-month rising wedge pattern. Prices broke below the lower boundary of the wedge last week. It is bearish with a downside price target projected around 150 at the lowest valley in the pattern.

 


 
US Dollar Forming 2-Month Descending Triangle Pattern


 

The U.S. dollar index is forming a 2-month descending triangle pattern. It is neutral before prices break out from the triangle.

 


 
Gold Forming 4-Month Falling Wedge Pattern


 

The gold index is forming a 4-month falling wedge pattern. It would become bullish if prices break above 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 rebounded towards the upper 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 the US treasury bond is underperforming.
 
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