12/05/2021 – Market Update
Volatile Market
The stock market extended losses and the Wilshire 5000 index declined below the 89-day exponential moving average last week. The market was very volatile as readings of our Broad Market Instability index surged to 1.5-year high. The market is near a short-term oversold condition. Semiconductors, Home Construction, and Technology 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 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 Descending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Broke in 6-Week Ascending Broadening Wedge Pattern
- US Dollar in 3-Month Ascending Broadening Wedge Pattern
- Gold in 2-Month Ascending Broadening Wedge Pattern
- Crude Oil Broke Below 6-Week Descending Triangle Pattern
- Asset Class Performance Ranking with US Treasury Bond 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 219 on Friday 12/3/2021 (up from 172 the previous week) which is above the panic threshold level of 42 and indicates a bearish market. The Wilshire 5000 index is below 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): 219, 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, Home Construction, and Technology. Underperforming sectors are Oil Equipment, Precious Metals, and Internet.
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 2-week descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
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 Descending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 7-week descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index formed a 3-month descending triangle pattern. The price broke above the upper boundary of the triangle last week. It is bullish with an upside price target projected at 3700.
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 7-Week Ascending Broadening Wedge Pattern
The 30-year U.S. treasury bond index is forming a 7-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 Triangle Pattern
The gold index is forming a 2-month ascending broadening triangle pattern. It is neutral before the price breaks out from the triangle.
Silver Broke Below 2.5-Month Rising Wedge Pattern
The silver index formed 2.5-month rising pattern. The price has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 23. This price target has been reached.
Crude Oil in 5-Week Descending Broadening Wedge Pattern
The crude oil index is forming a 5-week descending broadening wedge pattern. It is bearish as long as the price is below the upper boundary of the wedge.
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 oil is underperforming.
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