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05/01/2022 – Market Update

May 2, 2022 Leave a comment

 

Big Moves in Stocks and US Dollar

 

The stock market tumbled last week. The S&P 500 index is in the third intermediate downward wave based on Elliott wave analysis. This wave typically has a significant move in terms of the price range. The US dollar advanced sharply last week. Energy, Oil Equipment, and Consumer Goods ranked as the top three sectors with mostly strong technical strengths. The broad stock market is projected to be in a short-term neutral time-window until 5/3/2022.

 
Table of Contents


 

 

Broad Market in Short-Term Neutral Time-Window


 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 169 on Friday 4/29/2022 (up from 112 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 5/3/2022.

 

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: 05/27/2022
Broad Market Instability Index (BIX): 169, 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, 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. Currently, it is in intermediate downward wave (3). 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. This price target was reached last week.

 


 
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 downward wave (3).

 


 
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 has been reached.

 


 
Shanghai Composite Index: Intermediate-Term Pictures


 

The Shanghai Stock Exchange Composite index is forming a 6-week descending broadening wedge pattern in the daily chart. 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 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 5-Month Descending Broadening Wedge Pattern


 

The 30-year U.S. treasury bond index is forming a 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 Broke Below 2-Month Symmetrical Triangle Pattern


 

The gold index formed a 2-month symmetrical triangle pattern. The price broke below the lower boundary of the triangle last week. It is bearish with a downside price target projected at 1875. This price target has been quickly reached.

 

 
Silver Broke below 2-Month Descending Triangle Pattern


 

The silver index formed a 2-month descending triangle pattern. The price broke below the lower boundary of the triangle. It is bearish with a downside price target projected at 22.85. This price target is almost reached.

 

 
Crude Oil Broke above 2-Month Descending Triangle Pattern


 

The crude oil index formed a 2-month descending triangle pattern. The price broke above the upper boundary of the triangle last week. 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 the US treasury bond is underperforming.