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01/16/2022 – Market Update

January 17, 2022 Leave a comment

 

Oil Prices Spike but Everything Else Weaken

 

The 30-year U.S. treasury bond, the U.S. dollar, and the stock market all were weak except strong crude oil prices last week. The Wilshire 5000 index was testing its 89-day exponential moving average. Energy, Oil Equipment, and Semiconductor 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 1/21/2022.

 
Table of Contents

 

 

Broad Market in Short-Term Bearish Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 91 on Friday 1/14/2022 (up from 26 the previous week) which is above the panic threshold level of 42 and indicates a bearish market. The Wilshire 5000 index is slightly below the 89-day exponential moving average, and the momentum is near zero. 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 1/21/2022.

 

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: 01/21/2022
Broad Market Instability Index (BIX): 91, above the panic threshold (bearish)
Momentum Indicator: near zero (neutral)

 

 
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 Semiconductors. Underperforming sectors are Biotech, Internet, and Precious Metals.

 

 

 
S&P 500 Index Ending Primary Upward Wave 5

 

As shown in the weekly chart below, since March of 2020, the SPX has been in a primary upward wave [5], and it has developed intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Primary upward wave [5] is due to end, and primary downward wave [A] will be the next. Primary downward wave [A] is going to have intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence.

 

The S&P 500 index is forming a 4-week symmetrical 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 [5] which developed an intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Currently it is in a transition from primary upward wave [5] to primary corrective wave [A]. The next will be the first intermediate downward wave (1).

 


 
India Bombay Index Broke above 2-Month Descending Broadening Wedge Pattern

 

The India Bombay Stock Exchange 30 Sensex index formed a 2-month descending broadening wedge pattern. The price has broken above the upper boundary of the wedge. It is bullish with an upside price target projected at 62000.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index formed a 2-month ascending broadening wedge pattern. The price has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 3500.

 

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 Broke below 3-Month Ascending Broadening Wedge Pattern

 

The 30-year U.S. treasury bond index formed a 3-month ascending broadening wedge pattern. The price has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 156.

 


 
US Dollar Broke below 1.5-Month Descending Triangle Pattern

 

The U.S. dollar index formed a 2-month 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 95. This price target has been reached quickly.

 


 
Gold in 3.5-Month Horizontal Trading Range Pattern

 

The gold index is forming a 3.5-month horizontal trading range between 1760 and 1870. It is neutral before the price breaks out from the range.

 

 
Silver 1.5-Month Symmetrical Triangle Pattern

 

The silver index is forming a 1.5-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.

 

 
Crude Oil Broke above 2-Month Descending Broadening Wedge Pattern

 

The crude oil index formed a 2-month descending broadening wedge pattern. The price has broken above the upper boundary of the wedge. It is bullish with an upside price projected at 94.6.

 


 
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 US treasury bond is underperforming.