10/24/2021 – Market Update
Stocks Advanced to All-Time Highs
The US stock market advanced to all-time highs again last week. Energy, Oil Equipment, and Financials ranked as the top three sectors with mostly strong technical strengths. Crude oil extended gain with an uptrend channel pattern. The US dollar index was testing the lower boundary of a rising wedge pattern for a potential to the downside. The broad stock market is projected to be in a short-term neutral time-window until 10/29/2021.
Table of Contents
- Broad Market in Short-Term Neutral Time-Window
- Sector Performance Ranking with Energy Leading
- S&P 500 Index Ending Primary Upward Wave X
- German DAX Index: Elliott Wave
- India Bombay Index in 2-Month Ascending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 4-Week Descending Broadening Wedge Pattern
- US Dollar in 2-Month Rising Wedge Pattern
- Gold in 2-Month Descending Broadening Triangle Pattern
- Crude Oil in 2-Month Uptrend Channel Pattern
- Asset Class Performance Ranking with Oil Leading
Broad Market in Short-Term Neutral Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 20 on Friday 10/22/2021 (up from 17 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 positive. Based on the forecast of the Leading Wave Index (LWX), the broad stock market is projected to be in a short-term neutral time-window until 10/29/2021.
The Leading Wave Index (LWX) Indicator in Last Four Weeks (Actual)
The Leading Wave Index (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: 11/18/2021
Broad Market Instability Index (BIX): 20, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)
Sector Performance Ranking with Energy Leading
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 Energy, Oil Equipment, and Financials. Underperforming sectors are Biotech, Telecommunication, and Precious Metals.
S&P 500 Index Ending Primary Upward Wave X
As shown in the weekly chart below, since October of 2018, the SPX has been in a primary corrective wave [W]–[X]–[Y] sequence. After primary flat wave [W] ended late March of 2020, primary upward wave [X] started. Primary upward wave [X] has developed intermediate (a)–(b)–(c) three-wave sequence. Primary upward wave [X] is due to end, and primary downward wave [Y] will be the next. Primary downward wave [Y] is going to have intermediate (w)–(x)–(y) three-wave sequence.
The S&P 500 index formed a 6-week descending broadening wedge pattern. The price has broke above the upper boundary of the wedge. It is bullish with an upside price target projected at 4540. This price target has been reached.
German DAX Index: Elliott Wave
In the following weekly chart, since early March of 2020 the German DAX index has been in primary upward wave [X] which developed an intermediate (a)–(b)–(c) three-wave sequence. Currently it is in a transition from primary upward wave [X] to primary downward wave [Y]. The next will be the first intermediate downward wave (w).
India Bombay Index in 2-Month Ascending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 2-Month ascending broadening wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 2.5-month ascending broadening wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.
In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 1-year ascending triangle pattern. It is neutral before the price breaks out from the triangle.
US Treasury Bond in 4-Week Descending Broadening Wedge Pattern
The 30-year U.S. treasury bond index is forming a 4-week descending broadening wedge pattern. It is bearish as long as the price stays below the upper boundary of the wedge.
US Dollar in 2-Month Rising Wedge Pattern
The U.S. dollar index is forming a 2-month rising wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.
Gold in 2-Month Descending Broadening Triangle Pattern
The gold index is forming is forming a 2-month descending broadening triangle pattern. It is bearish before the price breaks above the upper boundary of the triangle.
Silver Broke above 4-Month Descending Broadening Wedge Pattern
The silver index formed a 4-month descending broadening wedge pattern. The price broke above the lower boundary of the wedge last week. It is bullish with an upside price target projected at 26.50.
Crude Oil in 2-Month Uptrend Channel Pattern
The crude oil index is forming a 2-month uptrend channel pattern. It is bullish as long as the price stays above the lower boundary of the channel.
Asset Class Performance Ranking with Oil Leading
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 oil is outperforming and the US treasury bond is underperforming.
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