02/27/2022 – Market Update
Volatile Market Sparked by Ukraine Crisis
The volatility was sparked by a Russian invasion of Ukraine, and the stock market was on a roller coaster ride last week. Energy, Oil Equipment, and Precious Metals ranked as the top three sectors with mostly strong technical strengths. Currently the S&P 500 index is below its 200-day exponential moving average with a downside risk. The broad stock market is projected to be in a short-term bearish time-window until 3/7/2022.
Table of Contents
- Broad Market in Short-Term Bearish 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 1.5-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 1.5-Month Ascending Triangle Pattern
- Gold in 2-Month Rising Wedge Pattern
- Crude Oil in 2.5-Month Ascending Broadening wedge Pattern
- Asset Class Performance Ranking with Oil Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 9 on Friday 2/25/2022 (down from 37 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 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 3/7/2022.
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: 03/07/2022
Broad Market Instability Index (BIX): 9, below the panic threshold (bullish)
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 Precious Metals. Underperforming sectors are Biotech, Internet, 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 downward wave (1).
The S&P 500 index is forming a 2-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 1.5-Month Descending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex 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.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite 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.
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 3-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
US Dollar in 1.5-Month Ascending Triangle Pattern
The U.S. dollar index is forming a 1.5-month ascending triangle pattern. It is neutral before the price breaks out from the triangle.
Gold in 2-Month Rising Wedge Pattern
The gold index is forming a 2-month rising wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.
Silver in 4-Week Uptrend Channel Pattern
The silver index is forming a 4-week uptrend channel pattern. It is bullish as long as the price stays above the lower boundary of the channel.
Crude Oil in 2.5-Month Ascending Broadening wedge Pattern
The crude oil index is forming a 2.5-month ascending broadening wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.
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.
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