05/15/2022 – Market Update
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
- Sector Performance Ranking with Energy Leading
- S&P 500 Index in Primary Corrective Wave A
- German DAX Index: Elliott Wave
- India Bombay Index in 6-Week Downtrend Channel Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Broke above 3-Month Falling Wedge Pattern
- US Dollar Broke above 2-Week Horizontal Trading Range Pattern
- Gold Broke below 2-Month Symmetrical Triangle Pattern
- Crude Oil Broke above 2-Month Descending Triangle Pattern
- Asset Class Performance Ranking with Oil Leading
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.
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