The US stock market closed slightly higher last week with very low volatility and weak momentum. Stocks in the technology sectors including Semiconductors, Internet, and Biotech heated up but most other sectors like Banks, Financials, Materials, Industrials, Telecommunication and Utilities lost steam. The S&P 500 index is still in stretching the final upward leg of its multi-month butterfly pattern heading towards a potential top reversal. The US dollar index is likely to form a multi-week inverse head-and-shoulders pattern for a potential bullish reversal. The 30-year US treasury bond remained bearish with a downtrend channel pattern. The broad stock market is projected to be in a short-term bearish time-window until 2/15/2021.

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 3 on Friday 1/22/2021 (down from 4 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 negative. Based on the forecast of the Leading Wave Index (LWX), the broad stock market is projected to be in a short-term bearish time-window until 2/15/2021.

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:

The following table ranks sectors by using the StockCharts Technical Rank (SCTR) based on six key indicators which cover long-term, medium-term and short-term timeframes. Outperforming sectors are Semiconductors, Oil Equipment, and Technology. Underperforming sectors are Precious Metals, Utilities, and Real Estate.

As shown in the weekly chart below, since October of 2018, the SPX has been in a primary corrective wave [W]–[X]–[Y] sequence. Primary flat wave [W] ended late March, and primary upward wave [X] has started. Primary upward wave [X] is going to have intermediate (a)–(b)–(c) three-wave sequence. Currently it is in intermediate upward wave (c) which is the last intermediate upward wave before the next primary downward wave [Y] starts.

The S&P 500 index on daily chart is forming a 4-month butterfly pattern which is a reversal pattern composed of four legs marked X-A, A-B, B-C and C-D. This pattern suggests that the stock market is heading for a major bearish reversal. The C-D leg is the final and most important part of the pattern. The C-D leg very often extends forming a 1.27 or 1.618 extension of the A-B leg. Currently the C-D leg on the SPX chart has over 1.6 extension which is at the high end of the target range. Watch out for a market top.

In the following weekly chart, since early March the German DAX index has been in primary upward wave [X] which will have an intermediate (a)–(b)–(c) three-wave sequence. Currently it is in intermediate upward wave (c).

The India Bombay Stock Exchange 30 Sensex index formed a 3.5-month rising wedge pattern. The price breached the lower boundary of the wedge. It is bearish with a downside price target projected at 45500.

The Shanghai Stock Exchange Composite index formed a 6-month horizontal trading range between 3200 and 3450. The price has broken above the upper boundary of the range. It is bullish with an upside price target projected at 3750.

In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 1.5-year rising wedge pattern. It is bullish as long as the price is above the lower boundary of the wedge.

The 30-year U.S. treasury bond index is forming a 6-month downtrend channel pattern. It is bearish before the price breaks above the upper boundary of the channel.

The U.S. dollar index is forming a 8-week inverse head-and-shoulders pattern. Now it is in developing the right shoulder. It will be a bullish signal once the price rises above the resistance of the neckline.

The gold index is forming a 7-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.

The silver index is forming a 5.5-month descending triangle pattern. It is neutral before the price breaks out from the triangle.

The crude oil index is forming a 2.5-month rising wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.

The following table ranks asset class by using the StockCharts Technical Rank (SCTR) based on six key indicators which cover long-term, medium-term and short-term timeframes. Currently equity is outperforming and the US treasury bond is underperforming.