08/14/2022 – Market Update
S&P 500 Index Forms a Multiweek Rising Wedge Pattern
The stock market advanced last week. Energy, Utilities, and Real Estate are ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index is forming a multiweek rising wedge pattern, and it is currently bullish but the pattern signals a breakout to the downside from the wedge sooner or later. The broad stock market is projected to be in a short-term bearish time-window until 9/7/2022.
Table of Contents
- Broad Market to be 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 in 2-Month Ascending Broadening Triangle Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Broke below 2-Month Rising Wedge Pattern
- US Dollar in 5-Week Falling Wedge Pattern
- Gold Broke above 2-Month Descending Broadening Wedge Pattern
- Crude Oil in 2-Month Falling Wedge Pattern
- Asset Class Performance Ranking with Crude Oil Leading
Broad Market to be in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 10 on Friday 8/12/2022 (up from 9 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is above 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 bearish time-window until 9/7/2022.
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: 09/07/2022
Broad Market Instability Index (BIX): 10, below the panic threshold (bullish)
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 Real Estate. Underperforming sectors are Precious Metals, Internet, and Telecommunication.
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] has ended, and now it is in primary corrective wave [A]. Primary corrective wave [A] is going to have intermediate (1)–(2)–(3)–(4)–(5) five-wave sequence. Currently, it is in intermediate upward wave (2).
The S&P 500 index is forming a 7-week rising wedge pattern. It is bullish before the price breaks below the lower 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 in 2-Month Ascending Broadening Triangle Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 2-month ascending broadening triangle pattern. It is bullish as long as the price is above the lower boundary of the triangle.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 5-week descending broadening wedge pattern on the daily chart. It is neutral before the price breaks out from the wedge.
In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 2-month rising wedge pattern. The price has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 3000.
US Treasury Bond Broke below 2-Month Rising Wedge Pattern
The 30-year U.S. treasury bond index formed a 2-month 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 137.
US Dollar in 5-Week Falling Wedge Pattern
The U.S. dollar index is forming a 5-week falling wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
Gold Broke above 2-Month Descending Broadening Wedge Pattern
The gold index formed a 2-month descending broadening wedge pattern. The price broke above the upper boundary of the wedge. It is bullish with an upside price target projected at 1870.
Silver Broke above 2-Month Descending Broadening Wedge Pattern
The silver index formed a 2-month descending broadening wedge pattern. The price broke above the upper boundary of the wedge. It is bullish with an upside price target projected at 22.25.
Crude Oil in 2-Month Falling Wedge Pattern
The crude oil index is forming a 2-month falling wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
Asset Class Performance Ranking with Crude 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 crude oil is outperforming and the US treasury bond is underperforming.
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