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06/05/2022 – Market Update

June 6, 2022 Leave a comment

 

Bear Market Rally Stalls

 

The stock market was flat last week. Energy, Oil Equipment, and Utilities are ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index may have difficulty to reach 4300 for this bear market rally. The broad stock market is projected to be in a short-term neutral time-window until 6/13/2022.

 
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 6 on Friday 6/3/2022 (up from 4 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 positive. 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 6/13/2022.

 

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: peak
Date of Next Cycle Low: 07/01/2022
Broad Market Instability Index (BIX): 6, below the panic threshold (bullish)
Momentum Indicator: positive (bullsih)

 

 
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 Utilities. 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 minor upward wave 2.

 

The S&P 500 index formed a 3-week “W” shape bottom pattern in the daily chart. The price broke above the neckline last Friday. It is bullish with an upside price target projected at 4250.

 


 
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 4-Week Rising Wedge Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 4-week rising wedge pattern. It is bullish as long as the price is above the lower boundary of the wedge.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index is forming a 5-week rising wedge pattern in the daily chart. It is bullish before the price breaks below the lower boundary of the wedge.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 8-month falling wedge pattern. The price broke above the upper boundary of the wedge. It is bullish with an upside price target projected at 3250.

 


 
US Treasury Bond Broke below 4-Week Rising Wedge Pattern

 

The 30-year U.S. treasury bond index formed a 4-week rising wedge pattern. The price broke below the lower boundary of the wedge. It is bearish with a downside price target projected at 135.5.

 


 
US Dollar in 5-Week Falling Wedge Pattern

 

The U.S. dollar index is forming a 5-week falling wedge pattern. It is bearish as long as the price is below the upper boundary of the wedge.

 


 
Gold Broke in 4-Week Rising Wedge Pattern

 

The gold index is forming a 4-week rising wedge pattern. It is neutral before the price breaks out from the wedge.

 

 
Silver in 4-Week Rising Wedge Pattern

 

The silver index is forming a 4-week rising wedge pattern. It is neutral before the price breaks out from the wedge.

 

 
Crude Oil in 6-Week Rising Wedge Pattern

 

The crude oil index is forming a 6-week rising wedge pattern. It is bullish as long as the price is above the lower boundary of the wedge.

 


 
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 US treasury bond is underperforming.