04/24/2022 – Market Update
Stocks Tumble
The stock market closed sharply lower while the US dollar extended its rally last week. Energy, Oil Equipment, and Consumer Goods ranked as the top three sectors with mostly strong technical strengths. Gold, silver, and crude oil currently are neutral before their next breakouts. The stock market reaches the trough of a short-term cycle. The broad stock market is projected to be in a short-term neutral time-window until 4/28/2022.
Table of Contents
- Broad Market to be in Short-Term Neutral 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 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 in 2-Month Symmetrical Triangle Pattern
- Crude Oil in 2-Month Descending Triangle Pattern
- Asset Class Performance Ranking with Oil Leading
Broad Market to be in Short-Term Neutral Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 112 on Friday 4/22/2022 (up from 68 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 neutral time-window until 4/28/2022.
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: trough
Date of Next Cycle High: 05/18/2022
Broad Market Instability Index (BIX): 112, above the panic threshold (bearish)
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, Home Construction, and Biotech.
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. This price target was reached last week.
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 has broken below the lower boundary of the triangle. It is bearish with a downside price target projected at 3140. This price target was reached last week.
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 has been reached.
Gold in 2-Month Symmetrical Triangle Pattern
The gold index is forming a 2-month symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.
Silver in 2-Month Descending Triangle Pattern
The silver index is forming a 2-month descending triangle pattern. It is neutral before the price breaks out from the triangle.
Crude Oil in 2-Month Descending Triangle Pattern
The crude oil index is forming a 2-month descending triangle pattern. It is neutral before the price breaks out from the triangle.
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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