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11/28/2021 – Market Update

November 29, 2021 Leave a comment

 

Elevated Market Volatility

 

The stock market broke out from 3-week-long sideways to the downside sharply last week. Crude oil also declined sharply. The market volatility elevated as readings of our Broad Market Instability index surged to 1-year high last Friday. Semiconductors, Technology, and Home Construction ranked as the top three sectors with mostly strong technical strengths. The broad stock market is projected to be in a short-term bearish time-window until 12/7/2021.

 
Table of Contents

 

 

Broad Market to be in Short-Term Bearish Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 172 on Friday 11/26/2021 (up from 62 the previous week) which is above the panic threshold level of 42 and indicates a bearish market. The Wilshire 5000 index is above the 89-day exponential moving average, and the momentum is 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 12/07/2021.

 

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: downward
Date of Next Cycle Low: 12/7/2021
Broad Market Instability Index (BIX): 172, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)

 

 
Sector Performance Ranking with Semiconductors 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 Semiconductors, Technology, and Home Construction. Underperforming sectors are Oil Equipment, Precious Metals, and Telecommunication.

 

 

 
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 3-week ascending triangle pattern. The price broke below the lower boundary of the triangle last week. It is bearish with a downside price target projected at 4630. This price target has been quickly 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 Broke Below 7-Week Symmetrical Triangle Pattern

 

The India Bombay Stock Exchange 30 Sensex index formed a 7-week symmetrical triangle pattern. The price broke below the lower boundary of the triangle last week. It is bearish with a downside price target projected at 58240. This price target has been quickly reached.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index is forming a 3-month descending triangle pattern. It is neutral before the price breaks out from the triangle.

 

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 6-Week Ascending Broadening Wedge Pattern

 

The 30-year U.S. treasury bond index is forming a 6-week Ascending broadening wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.

 


 
US Dollar in 3-Month Ascending Broadening Wedge Pattern

 

The U.S. dollar index is forming a 3-month ascending broadening wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.

 


 
Gold in 2-Month Ascending Broadening Wedge Pattern

 

The gold 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.

 

 
Silver Broke Below 2.5-Month Rising Wedge Pattern

 

The silver index formed 2.5-month rising pattern. The price broke below the lower boundary of the wedge last week. It is bearish with a downside price target projected at 23.

 

 
Crude Oil Broke Below 6-Week Descending Triangle Pattern

 

The crude oil index formed a 6-week descending triangle pattern. The price broke below the lower boundary of the triangle last week. It is bearish with a downside price target projected at 70. This price target has been quickly reached.

 


 
Asset Class Performance Ranking with US Treasury Bond 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 the US treasury bond is outperforming and gold is underperforming.