04/17/2022 – Market Update
Weakening Stocks and 30-Year Treasury Bond
The stock market and 30-year U.S. treasury bond drifted lower with weakening momentum and rising volatility last week. The US dollar, gold, silver, and crude oil were bullish following their technical upside breakouts. Currently Oil Equipment, Energy, 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 4/21/2022.
Table of Contents
- Broad Market in Short-Term Bearish Time-Window
- Sector Performance Ranking with Oil Equipment Leading
- S&P 500 Index in Primary Corrective Wave A
- German DAX Index: Elliott Wave
- India Bombay Index Broke below 6-week rising wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 4.5-Month Descending Broadening Wedge Pattern
- US Dollar Broke above 5-Week Descending Triangle Pattern
- Gold Broke above 4-Week Symmetrical Triangle Pattern
- Crude Oil Broke above 6-Week Descending Triangle 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 68 on Thursday 4/14/2022 (down from 75 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 4/21/2022.
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: 04/21/2022
Broad Market Instability Index (BIX): 68, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)
Sector Performance Ranking with Oil Equipment 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 Oil Equipment, Energy, and Precious Metals. Underperforming sectors are Internet, Home Construction, and Semiconductors.
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. Currently, intermediate upward wave (2) has ended, and intermediate downward wave (3) has started. Typically the third wave has a significant move.
The S&P 500 index formed a 6-week rising wedge pattern. The price has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 4175.
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, intermediate upward wave (2) has ended, and intermediate downward wave (3) has started.
India Bombay Index Broke below 6-Week Rising Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index formed a 6-week rising wedge pattern. The price has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 56500.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 4-week ascending triangle pattern in the daily chart. The price broke below the lower boundary of the triangle last week. It is bearish with a downside price target projected at 3140.
In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 6-month falling wedge pattern. It is bearish as long as the price is below the upper boundary of the wedge.
US Treasury Bond in 4.5-Month Descending Broadening Wedge Pattern
The 30-year U.S. treasury bond index is forming a 4.5-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
US Dollar Broke above 5-Week Descending Triangle Pattern
The U.S. dollar index formed a 5-week descending triangle pattern. The price broke above the upper boundary of the triangle. It is bullish with an upside price target projected at 100. This price target was reached last week.
Gold Broke above 4-Week Symmetrical Triangle Pattern
The gold index formed a 4-week symmetrical triangle pattern. The price broke above the upper boundary of the triangle last week. It is bullish with an upside price target projected 1990.
Silver Broke above 5-Week Falling Wedge Pattern
The silver index formed a 5-week falling wedge pattern. The price broke above the upper boundary of the wedge last week. It is bullish with an upside price target projected 26.7.
Crude Oil Broke above 6-Week Descending Triangle Pattern
The crude oil index formed a 6-week descending triangle pattern. The price broke above the upper boundary of the triangle last week. It is bullish with an upside price target projected 122.
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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