06/12/2022 – Market Update
Stocks Resumed Decline
The bear market rally for stocks ended last week, and price decline was resumed. Internet, Consumer Services, and Technology are ranked as the three worst sectors with mostly weak technical strengths. Currently both mid-term and short-term for the S&P 500 index have downward wave 3 which is the most dangerous case to the downside. The S&P 500 index is going to test a support level at 3900 this week. If the price breaks below this level, the S&P 500 index would have an immediate downside price target projected at 3700. The broad stock market is projected to be in a short-term bearish time-window until 6/28/2022.
Table of Contents
- Broad Market in Short-Term Bearish 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 4-Week Rising Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Broke below 4-Week Rising Wedge Pattern
- US Dollar Broke above 5-Week Falling Wedge Pattern
- Gold in 5-Week Rising Wedge Pattern
- Crude Oil in 7-Week Rising Wedge Pattern
- Asset Class Performance Ranking with Oil Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 20 on Friday 6/10/2022 (up from 6 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 bearish time-window until 6/28/2022.
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: downward
Date of Next Cycle Low: 06/28/2022
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 Precious Metals. Underperforming sectors are Internet, Consumer Services, and Technology.
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. Intermediate downward wave (3) will contain 1–2–3–4–5 minor waves. Right now minor upward wave 2 has ended and minor downward wave 3 has started.
The S&P 500 index is forming a 7-week descending triangle pattern. It is neutral before the price breaks out from the triangle. If it breaks below the lower boundary of the triangle, it would be bearish with a downside price target projected at 3700.
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 4-Week Rising Wedge Pattern
The India Bombay Stock Exchange 30 Sensex 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 52750.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 7-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 has broken above the upper boundary of the wedge. It is bullish with an upside price target projected at 3250. This price target has been reached.
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 has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 135.5.
US Dollar Broke above 5-Week Falling Wedge Pattern
The U.S. dollar index formed a 5-week 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 104.75.
Gold Broke in 5-Week Rising Wedge Pattern
The gold index is forming a 5-week rising wedge pattern. It is neutral before the price breaks out from the wedge.
Silver Broke below 4-Week Rising Wedge Pattern
The silver index formed a 4-week rising wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish with a downside price target projected at 20.6.
Crude Oil in 7-Week Rising Wedge Pattern
The crude oil index is forming a 7-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.
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