03/06/2022 – Market Update
Breakouts on Crude Oil, US Dollar and US Treasury Bond
The prices of crude oil, the US dollar, and the 30-year U.S. treasury bond had upward breakouts while the stock market was almost flat last week. Energy, Oil Equipment, and Precious Metals 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 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 2-Month Falling Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Broke above 3-Month Descending Broadening Wedge Pattern
- US Dollar Broke above 1.5-Month Ascending Triangle Pattern
- Gold in 2-Month Rising Wedge Pattern
- Crude Oil Broke above 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 165 on Friday 3/4/2022 (up from 9 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 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): 165, 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 Precious Metals. Underperforming sectors are Internet, Biotech, and Consumer Services.
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 3-month downtrend channel pattern. It is bearish before the price breaks above the upper boundary of the channel.
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 2-Month Falling Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 2-month falling wedge 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 6-week rising wedge pattern. It is neutral before the price breaks out from the wedge.
In the following weekly chart, the Shanghai Stock Exchange Composite index is forming a 16-month horizontal trading range pattern between 3350 and 3700. It is neutral before the price breaks out from the range.
US Treasury Bond Broke above 3-Month Descending Broadening Wedge Pattern
The 30-year U.S. treasury bond index formed a 3-month descending broadening wedge pattern. The price broke above the upper boundary of the wedge last week. It is bullish with an upside price target projected at 164.
US Dollar Broke above 1.5-Month Ascending Triangle Pattern
The U.S. dollar index formed a 1.5-month ascending triangle pattern. The price broke above the upper boundary of the triangle. It is bullish with an upside price target projected at 99.
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 5-Week Uptrend Channel Pattern
The silver index is forming a 5-week uptrend channel pattern. It is bullish as long as the price stays above the lower boundary of the channel.
Crude Oil Broke above 2.5-Month Ascending Broadening wedge Pattern
The crude oil index formed a 2.5-month ascending broadening wedge pattern. The price broke above the upper boundary of the wedge. It is bullish with an upside price target projected at 120.
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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