06/20/2022 – Market Update
Stocks Made a New Low of this Year
The stock market tumbled last week, and made a new low for this year. The market was very volatile as readings of our Broad Market Instability index surged up to 500 mark. The S&P 500 index is very bearish in a confluence of both mid-term downward wave 3 and short-term downward wave 3. Internet, Home Construction, and Semiconductors are ranked as the three worst sectors with mostly weak technical strengths. 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 in 2.5-Month Descending Broadening Wedge Pattern
- US Dollar in 2.5-Month Rising Wedge Pattern
- Gold in 6-Week Horizontal Trading Range Pattern
- Crude Oil Broke below 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 314 on Friday 6/17/2022 (up from 20 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 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): 314, 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, Home Construction, and Semiconductors.
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 it is in minor downward wave 3.
The S&P 500 index formed a 7-week descending triangle pattern. The price broke below the lower boundary of the triangle last week. It is bearish with a downside price target projected at 3700. This price target has been quickly reached.
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 has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 52750. This price target has been reached.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 2-month 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 in 2.5-Month Descending Broadening Wedge Pattern
The 30-year U.S. treasury bond index is forming a 2.5-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
US Dollar in 2.5-Month Rising Wedge Pattern
The U.S. dollar index is forming a 2.5-month rising wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.
Gold Broke in 6-Week Horizontal Trading Range Pattern
The gold index is forming a 6-week horizontal trading range pattern. It is neutral before the price breaks out from the range.
Silver in 6-Week Horizontal Trading Pattern
The silver index formed a 6-week horizontal trading range pattern. It is neutral before the price breaks out from the range.
Crude Oil Broke below 7-Week Rising Wedge Pattern
The crude oil index formed a 7-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 108.
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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