Dr. Nu Yu?s View: A Short-term Bullish Window Has Opened

Gold and silver mining stocks have bounced over 11% from their mid-May lows….[which] could be a bullish sign for a recovery of this commodity-driven and oversold market. A short-term bullish time-window started just*last Friday, and it is projected to last…until 6/11/2012. [Below I put forth my projections for the near-term market trends and levels for the American and Chinese stock markets, gold, silver and the HUI, the U.S. Dollar Index, crude oil and 30-yr US Treasury Bonds. Take a look. You will be presently surprised.] Words: 1086
So says Dr. Nu Yu (http://fx5186.wordpress.com) in edited excerpts from his original analyses*.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

[Before I begin with comments and charts on each market sector below is a brief overview:]*

Summary

1. Wilshire 5000 has entered a short-term bullish time window
2. S&P 500 Index is in a Descending Broadening Triangle Pattern
3. Shanghai Composite Index is forming a possible Head-and-Shoulders Bottom Pattern
4. Gold is in a Descending Triangle Pattern
5. Silver is in Descending Triangle Pattern too
6. Gold/Silver Mining Stocks are in Bullish Reversals
7. Crude Oil looks for a possible Bullish Reversal
8. US Dollar*Index target revised
9. 30-Year US Treasury Bond broke out from the trading range
10. The Asset Class Performance Ranking*has U.S. Treasury Bonds leading
11. The Sector Performance Ranking*has the*Biotech sector leading
12. The BRIC Stock Market Performance Ranking*has the*Chinese market leading

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1. Wilshire 5000 Has Entered A Short-Term Bullish Time Window


a) The LWX Indicator in Last Four Weeks (Past)
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The leading Wave Index (LWX) indicator (see table above) is my proprietary leading indicator for the US equity market and it shows that the broad market has just entered a short-term bullish window which is projected to last until 6//11/2012 (see table below).
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b) The LWX Indicator in Next Four Weeks (Forecast)
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c) The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, calmed down to 54 from 458 the previous week which is still slightly above the panic threshold level of 44.

d) The Wilshire 5000 Index below, the price bars color-coded with the LWX indicator shows that the current market…is in an upswing.






*2. S&P 500 Index

The S&P 500 index is in a Descending Broadening Wedge formation (see here) confined by two down-slopping diverging trend lines. The main characteristic of this pattern is that price movement becomes more and more volatile with a series of up-and-down high-waves. Last week the SPX had a rebound from the lower boundary of the wedge, and the market gradually started a recovery. Although an upswing in a descending broadening wedge can potentially move from the lower boundary to the upper boundary, this time I would use a parallel line of the lower boundary as a target line to project the first price target around 1350. This target would be adjusted to a higher price near the upper boundary of the wedge if market conditions improve.





3. Shanghai Composite Index

The Shanghai Composite Index is still in the progress of forming a possible inverse Head-and-Shoulders pattern. In general, the foreign markets recently performed much worse than the U.S. market. However, the Chinese market performed better than the U.S. market (see the BRIC market performance table on the bottom of this page).

If the global stock markets have a technical rebound, the Chinese market could break out from its inverse head-and-shoulders pattern. Such a bullish breakout of the Chinese market may support a bullish reversal of gold and silver.






4. Gold

[As mentioned in my market trend analysis last week - see here] – gold*continues to form a Descending Triangle pattern with a falling resistance line and a horizontal support line. The descending triangle generally appears in downtrends. Price movement is choppy between the two boundary lines before a breakout from the either side of the triangle.

A bullish reversal from the horizontal support line of the triangle could start an upswing towards the previous intermediate-term trendline. The upside price target is projected at $1675 near the trendline (the gray dotted line).






5. Silver

Silver has been in a Descending Triangle pattern since last*April with a falling resistance line and a horizontal support line. A bullish reversal from the support of the horizontal line could set up the next upside price target of around $32*at the upper boundary of the triangle.






6. Gold/Silver Mining Stocks

Both XAU and HUI have impressively bounced over 11% from the lower boundary of their downtrend channels. The upside price targets for this counter-trend move are projected at the resistance from the horizontal lines of the previous descending triangle patterns, i.e., 175 for XAU and 480 for HUI.









7. West Texas Intermediate Crude (WTIC)*Oil

The crude oil forms a possible downtrend channel pattern, and looks for a bullish reversal from the support of the lower trend line.






8. US Dollar Index

The US dollar index extended its rally after it broke out from a four-month descending triangle. The upside price target of 81.50 which I projected on May 11th [see here] now seems a little conservative. According to Bulkowski’s measure rule (see here) for an upside breakout of descending triangles, from the high price (81.50), the horizontal line price (78.25), the target meeting rate (84%) and the breakout price (79.75), the upside target price could be derived as 79.75 + ( 81.50 – 78.25 ) x 0.84 = 82.48.






9. U.S. Treasury Bond

The 30-Year US Treasury Bond index broke out from the upper horizontal resistance line of the 9-month rectangular pattern, and made a new high over 148. It may pull back to re-test the upper horizontal line of the rectangular.






10. Asset Class Performance Ranking with U.S. Treasury Bond Leading

The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently the U.S. Treasury Bond is outperforming. Crude oil is underperforming.






11. Sector Performance Ranking with Biotech Sector Leading

The following table is the percentage change of sectors and major market indexes against the 89-day exponential moving average (EMA89). The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total market, is 2.30% below the EMA89.

Outperforming sectors are Biotech (4.77%), Telecommunication (3.90%), and Consumer Services (1.00%). Underperforming sectors are Precious Metals (-7.50%), Semiconductors (-7.30%), and Basic Materials (-6.82%). The S&P 400 Mip-cap (-2.18%) is outperforming the market, and the Russell 2000 Small-cap (-3.21%) is underperforming.




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12. BRIC Stock Market Performance Ranking with the Chinese Market Leading

The table below is the percentage change of the BRIC stock market indexes against the 89-day exponential moving average (EMA89), also in comparison to the US market. The Chinese market is outperforming and all other BRIC markets are underperforming.



*http://fx5186.wordpress.com/2012/05/27/5272012/

Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

Related Articles:

1. Dr. Nu Yu: Congratulations! ALL Your Recent Market Trend Forecasts Were 99% Accurate…So What Does the Short-term Future Hold?



As editor of this site I have never been a cheerleader for any author but I must make an exception in this case. We all have read analysis after analysis that just doesn’t make the cut but those of Dr. Yu do, as this one so clearly demonstrates. If you only have time to read one article as to where the price of gold, silver, mining stocks, crude oil, the stock market, U.S. treasuries and the U.S. Dollar index are going his analyses are a MUST read! Take a look. Words: 1226

2. Dr. Nu Yu’s Latest Analyses of Developing Trends in Gold, Silver, HUI and S&P 500 are NOT a Pretty Sight!

My weekly analyses of the developing trends in gold; silver; S&P 500, Wilshire 5000, HUI and XAU indices; West Texas crude oil; the US Dollar Index and 30-year U.S. Treasury bonds are not a pretty sight. Take a look and you will see just how low these various asset classes and sectors are expected to go over the next week or two. Words: 1350
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3. Gold and Gold Stocks Going Even Lower! Here’s Why


The Fed’s recent inference that QE3 was not imminent has caused physical gold and silver and the HUI and the XAU to breach their downside support lines. These transitions set up the distinct possibility that we could well see $1,500 gold and the HUI and XAU at 400 and 144, respectively! Let me outline my analyses of the current situation and how it might unfold. Words: 386

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