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05/15/2022 – Market Update

May 16, 2022 Leave a comment

 

US Dollar Rocketed

 

The US dollar extended rally to 20-year highs while gold and silver tumbled. The stock market was on a roller coaster ride for another week. Readings of our Broad Market Instability index surged up above 500 mark in the middle week, but dropped below the panic threshold level on Friday. A short-term rebound was starting for stocks. Energy, Oil Equipment, and Consumer Goods are ranked as the top three sectors with mostly strong technical strengths. The broad stock market is projected to be in a short-term bullish time-window until 6/2/2022.

 
Table of Contents

 

 

Broad Market to be in Short-Term Bullish Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 20 on Friday 5/13/2022 (down from 197 the previous week) which is below the panic threshold level of 42 and indicates a bullish 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 bullish time-window until 6/2/2022.

 

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: 06/02/2022
Broad Market Instability Index (BIX): 20, below the panic threshold (bullish)
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, Consumer Services, 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, it is in intermediate downward wave (3). Typically the third wave has a significant move, and it will contains 1–2–3–4–5 minor waves. Right now it is in the late part of minor downward wave 1. Minor upward wave 2 will be the next.

 

The S&P 500 index is forming a 7-week descending broadening wedge pattern. It is bearish as long as the price is below the upper boundary of the wedge.

 


 
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 in 6-Week Downtrend Channel Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 6-week downtrend channel pattern. It is bearish as long as the price is below the upper boundary of the channel.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index is forming a 7-week descending broadening wedge pattern in the daily chart. The price is testing the upper boundary of the wedge. It would become bullish after the price breaks above the upper boundary.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 8-month falling wedge pattern. It is bearish as long as the price is below the upper boundary of the wedge.

 


 
US Treasury Bond Broke above 3-Month Falling Wedge Pattern

 

The 30-year U.S. treasury bond index formed a 3-month falling wedge pattern. The price broke above the upper boundary of the wedge last week. It is bullish with an upside price target projected at 151.

 


 
US Dollar Broke above 2-Week Horizontal Trading Range Pattern

 

The U.S. dollar index is formed a 2-week horizontal trading range pattern between 102.25 and 104. The price broke above the upper boundary of the range. It is bullish with an upside price target projected at 105.75.

 


 
Gold Broke Below 2-Month Symmetrical Triangle Pattern

 

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

 

 
Silver Broke below 2-Month Descending Triangle Pattern

 

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

 

 
Crude Oil Broke above 2-Month Descending Triangle Pattern

 

The crude oil index formed a 2-month descending triangle pattern. The price has broken above the upper boundary of the triangle. 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.