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07/10/2022 – Market Update

July 11, 2022 Leave a comment

 

S&P 500 Facing Resistance Level 3900

 

Stocks advanced last week, and the S&P 500 index reached a resistance level at 3900. Pharmaceuticals, Energy, and Health Care are ranked as the top three sectors with mostly strong technical strengths. The US dollar explosively broke out from a 2.5-month rising wedge pattern, and added pressure on gold and silver. 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 35 on Friday 7/8/2022 (down from 101 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 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): 35, below the panic threshold (bullish)
Momentum Indicator: positive (bullish)

 

 
Sector Performance Ranking with Pharmaceuticals 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 Pharmaceuticals, Energy, and Health Care. 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 4-week ascending triangle pattern on the daily chart. It is neutral before the price breaks from the triangle.

 


 
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 above 3-Month Falling Wedge Pattern

 

The India Bombay Stock Exchange 30 Sensex 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 56500.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index is forming a 2-month rising wedge pattern in the daily chart. The price breached the lower boundary of the wedge last week. It is bearish with a downside price target projected at 3275.

 

In the following weekly chart, the Shanghai Stock Exchange Composite indexis forming a 2-month rising wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.

 


 
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 Broke above 2.5-Month Rising Wedge Pattern

 

The U.S. dollar index formed a 2.5-month rising wedge pattern. The price broke above the upper boundary of the wedge last week. It is bullish with an upside price target projected at 109.

 


 
Gold Broke below 7-Week Horizontal Trading Range Pattern

 

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

 

 
Silver Broke below 7-Week Horizontal Trading Range Pattern

 

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

 

 
Crude Oil in 5-Week Descending Broadening Wedge Pattern

 

The crude oil index is forming a 5-week descending broadening wedge pattern. It is bearish before the price breaks above the upper 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 the US treasury bond is underperforming.