02/13/2022 – Market Update
Weakening Stock Market
The stock market was weakening last week. The S&P 500 index could not stay above its 89-day exponential moving average. Now it is going to test the 200-day exponential moving average again. Energy, Oil Equipment, and Consumer Goods ranked as the top three sectors with mostly strong technical strengths. The price of crude oil continued moving higher towards our price target 94.6. The 30-year U.S. treasury bond is still bearish while the US dollar and gold are neutral. The broad stock market is projected to be in a short-term bullish time-window until 2/15/2022.
Table of Contents
- Broad Market in Short-Term Bullish Time-Window
- Sector Performance Ranking with Energy Leading
- S&P 500 Index in Primary Corrective Wave A
- German DAX Index: Elliott Wave
- India Bombay Index in 1-Month Descending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 2.5-Month Descending Broadening Wedge Pattern
- US Dollar in 3-Month Symmetrical Triangle Pattern
- Gold in 3.5-Month Symmetrical Triangle Pattern
- Crude Oil Broke above 2-Month Descending Broadening Wedge Pattern
- Asset Class Performance Ranking with Oil Leading
Broad Market in Short-Term Bullish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 27 on Friday 2/11/2022 (down from 39 the previous week) which is below the panic threshold level of 42 and indicates a bullish 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 bullish time-window until 2/15/2022.
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: upward
Date of Next Cycle High: 02/15/2022
Broad Market Instability Index (BIX): 27, below the panic threshold (bullish)
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 Home Construction.
S&P 500 Index in Primary Corrective Wave A
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 corrective wave [A] started. Primary corrective wave [A] is going to have intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Now it is in an intermediate upward wave (2).
The S&P 500 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.
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. Primary upward wave [5] ended, and primary corrective wave [A] started. Primary corrective wave [A] is going to have intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Currently it is in the first intermediate downward wave (1).
India Bombay Index in 1-Month Descending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 1-month 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 5-month double-top pattern. The price has broken below the neckline. It is bearish with a downside price target projected at 3350. The price pulled back to re-test the resistant line at 3480.
In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 1-year ascending triangle pattern. The price has broken below the lower boundary of the triangle. It is bearish with a downside price target projected at 3260.
US Treasury Bond in 2.5-Month Descending Broadening Wedge Pattern
The 30-year U.S. treasury bond index is forming a 2.5-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
US Dollar in 3-Month Symmetrical Triangle Pattern
The U.S. dollar index is forming a 3-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.
Gold in 3.5-Month Symmetrical Triangle Pattern
The gold index is forming a 3.5-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.
Silver in 2-Month Ascending Broadening Triangle Pattern
The silver index is forming a 2-month ascending broadening 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 treasuary bond is underperforming.
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