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01/23/2022 – Market Update

January 24, 2022 Leave a comment

 

Stocks Test Support at 200-Day Moving Average

 

The stock market declined sharply last week as readings of our Broad Market Instability index surged above the panic threshold level. The S&P 500 index broke below its 89-day exponential moving average, and now it is in the first intermediate downward wave with a downside price target projected at 4380. The 200-day exponential moving average will be tested for a support this week. Energy, Oil Equipment, and Consumer Goods 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 1/25/2022.

 
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 269 on Friday 1/21/2022 (up from 91 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 1/25/2022.

 

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: 01/25/2022
Broad Market Instability Index (BIX): 269, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)

 

 
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 Consumer Goods. Underperforming sectors are Internet, Biotech, and Consumer Services.

 

 

 
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 ending, and primary downward wave [A] started. Primary downward wave [A] is going to have intermediate (1)(2)(3)(4)(5) five-wave sequence. Now it is in the first intermediate downward wave (1).

 

The S&P 500 index formed a 3-month ascending broadening triangle pattern. The price broke the lower boundary of the triangle. It is bearish with a downside price target projected at 4380 which is also near the 200-day exponential moving average.

 


 
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 broke above the upper boundary of the wedge. Now it is pulling back for a consolidation.

 


 
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 in 1.5-Month Descending Broadening Wedge Pattern


 

The 30-year U.S. treasury bond index is forming a 1.5-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.

 


 
US Dollar in 2-Month Descending Broadening Wedge Pattern


 

The U.S. dollar index is forming a 2-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.

 


 
Gold in 2-Month Rising Wedge Pattern


 

The gold index is forming a 2-month rising range between. It is bullish before the price breaks below the lower boundary of the wedge.

 

 
Silver Broke above 1.5-Month Symmetrical Triangle Pattern


 

The silver index formed a 1.5-month symmetrical triangle pattern. The price broke above the upper boundary of the triangle last week. It is bullish with an upside price target projected at

 

 
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 equity is underperforming.

 

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