11/21/2021 – Market Update

November 22, 2021 Leave a comment

Stocks Moving Sideways

The US stock market continued moving sideways last week. Semiconductors, Technology, and Home Construction ranked as the top three sectors with mostly strong technical strengths. The US dollar advance sharply and crude oil started to decline. Please note that readings of our Broad Market Instability index started to rise. The broad stock market is projected to be in a short-term bearish time-window until 11/26/2021.

Table of Contents

Broad Market in Short-Term Bearish Time-Window
Sector Performance Ranking with Semiconductors Leading
S&P 500 Index Ending Primary Upward Wave X
German DAX Index: Elliott Wave
India Bombay Index in 7-Week Symmetrical Triangle Pattern
Shanghai Composite Index: Intermediate-Term Pictures
US Treasury Bond Broke in 5-Week Ascending Broadening Wedge Pattern
US Dollar Broke above 6-Week Descending Triangle Pattern
Gold Broke above 7-Week Rising Wedge Pattern
Crude Oil in 6-Week Descending Triangle Pattern
Asset Class Performance Ranking with Oil Leading

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 62 on Friday 11/19/2021 (down from 16 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 11/26/2021.

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: 11/26/2021

Broad Market Instability Index (BIX): 62, 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 is forming a 3-week ascending triangle pattern. It is neutral before the price breaks out from the triangle.

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 7-Week Symmetrical Triangle Pattern

The India Bombay Stock Exchange 30 Sensex index is forming a 7-week symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.

Shanghai Composite Index: Intermediate-Term Pictures

The Shanghai Stock Exchange Composite index is forming a 2.5-month falling wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge. Now the price is testing the upper boundary for a potential breakout.

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 5-Week Ascending Broadening Wedge Pattern

The 30-year U.S. treasury bond index is forming a 5-week Ascending broadening wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.

US Dollar Broke above 6-Week Descending Triangle Pattern

The U.S. dollar index formed a 6-week descending broadening triangle pattern. The price has broken above the upper boundary of the triangle. It is bullish with an upside price target projected at 95.3. This price target has been reached.

Gold Broke above 7-Week Rising Wedge Pattern

The gold index formed a 7-week rising wedge pattern. The price has broken above the upper boundary of the wedge. It is bullish with an upside price target projected at 1880. The price briefly touched the target price then pulled back last week.

Silver in 2.5-Month Rising Wedge Pattern

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

Crude Oil in 6-Week Descending Triangle Pattern

The crude oil index is forming a 6-week descending triangle pattern. It is bearish before the price breaks above the upper boundary of the triangle.

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 gold is underperforming.