03/20/2022 – Market Update
Stocks Rebounded
The stock market rebounded sharply last week. The S&P 500 index currently is right below its 89-day exponential moving average, and it in an upward wave which could be counted as the second wave of a corrective 5-wave sequence. Energy, Oil Equipment, and Precious Metals ranked as the top three sectors with mostly strong technical strengths. The US dollar and crude oil are neutral. The broad stock market is projected to be in a short-term bullish time-window until 3/30/2022.
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 2-Month Descending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 3.5-Month Descending Broadening Wedge Pattern
- US Dollar in 3-Week Descending Triangle Pattern
- Gold in 1.5-Month Ascending Broadening Wedge Pattern
- Crude Oil in 4-Week Horizontal Trading Range 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 2 on Friday 3/18/2022 (down from 86 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is right below the 89-day exponential moving average, and the momentum is positive. 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 3/30/2022.
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: 03/30/2022
Broad Market Instability Index (BIX): 2, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)
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 Telecommunication.
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 intermediate upward wave (2).
The S&P 500 index formed a 4-week w-shape pattern on the daily chart. The price broke above the neckline of the pattern last week. It is bullish with an upside price target projected at 4570.
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 intermediate upward wave (2).
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 last week. It is bullish with an upside price target projected at 59500.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 3-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 formed a 16-month horizontal trading range pattern between 3350 and 3700. The price broke below the lower boundary of the range. It is bearish with a downside price target projected at 3160.
US Treasury Bond in 3.5-Month Descending Broadening Wedge Pattern
The 30-year U.S. treasury bond index is forming a 3.5-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
US Dollar in 3-Week Descending Triangle Pattern
The U.S. dollar index is form a 3-week descending triangle pattern. It is neutral before the price breaks out from the triangle.
Gold in 1.5-Month Ascending Broadening Wedge Pattern
The gold index is forming a 1.5-month ascending broadening wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.
Silver in 1.5-Month Ascending Broadening Wedge Pattern
The silver index is forming a 1.5-month ascending broadening wedge pattern. It is bullish as long as the price stays above the lower boundary of the wedge.
Crude Oil in 4-Week Horizontal Trading Range Pattern
The crude oil index is forming a 4-week horizontal trading range pattern. It is neutral before the price breaks out from the range.
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 the US treasury bond is underperforming.
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