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07/04/2022 – Market Update

July 5, 2022 Leave a comment

 

Stocks Retreated from Bounce

 

Stocks retreated from the previous week’s bounce. The market volatility jumped up again as readings of our Broad Market Instability index rose above the panic threshold. Internet, Semiconductors, and Consumer Services are ranked as the three worst sectors with mostly weak technical strengths. Gold and silver also turned bearish after their prices broke below the lower boundary of a 7-week horizontal trading range pattern last week. The broad stock market is projected to be in a short-term bullish time-window until 7/12/2022.

 
Table of Contents

 

 

Broad Market in Short-Term Bullish Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 101 on Friday 7/1/2022 (up from 31 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 positive. 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 7/12/2022.

 

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: 07/12/2022
Broad Market Instability Index (BIX): 101, above the panic threshold (bearish)
Momentum Indicator: positive (bullish)

 

 
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, Utilities, and Pharmaceuticals. Underperforming sectors are Internet, Semiconductors, and Consumer Services.

 

 

 
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 is forming a 2-month descending broadening wedge pattern. It is bearish before the price breaks above 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 3-Month Falling Wedge Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 3-month falling wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.

 


 
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 below 7-Week Horizontal Trading Range Pattern

 

The gold index formed a 7-week horizontal trading range pattern. The price broke below the lower boundary of the range last week. It is bearish with a downside price target projected at 1740.

 

 
Silver Broke below 7-Week Horizontal Trading Range Pattern

 

The silver index formed a 7-week horizontal trading range pattern. The price broke below the lower boundary of the range last week. It is bearish with a downside price target projected at 19.25.

 

 
Crude Oil Broke below 7-Week Rising Wedge Pattern

 

The crude oil index formed a 7-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 108. This price target was reached last week.

 


 
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 equity is underperforming.