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09/25/2022 – Market Update

September 26, 2022 Leave a comment

 

Everything Imploding Except US Dollar

 

The stock market and the 30-year U.S. treasury bond tumbled further last week after the Fed raised rates by 75 basis points. The US dollar exploded to the upside and hit new 20-year high. The market volatility surged as readings of our Broad Market Instability index reached over 450. The S&P 500 index, gold, and crude oil are all in their bearish descending broadening wedge patterns. Precious Metals, Internet, 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 9/30/2022.

 
Table of Contents

 

 

Broad Market in Short-Term Bearish Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 453 on Friday 9/23/2022 (up from 96 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 9/30/2022.

 

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: 09/30/2022
Broad Market Instability Index (BIX): 453, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)

 

 
Sector Performance Ranking with Utilities 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 Utilities, Consumer Goods, and Energy. Underperforming sectors are Precious Metals, Internet, 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] 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. Intermediate downward wave (3) has started, and it will have minor 1-2-3-4-5 five-wave sequence. Currently it is in minor downward wave 1.

 

The S&P 500 index is forming a 6-week 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 Broke below 3-Month Ascending Broadening Wedge Pattern

 

The India Bombay Stock Exchange 30 Sensex index formed a 3-month ascending broadening wedge pattern. The price broke below the lower boundary of the wedge. It is bearish with a downside price target projected at 52500.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index formed a 2-month symmetric triangle pattern on the daily chart. The price has broken below the lower boundary of the triangle. It is bearish with a downside price target projected at 3130. This price target has been reached.

 

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 has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 137. This price target has been reached.

 


 
US Dollar Broke above 2-Month Rising Wedge Pattern

 

The U.S. dollar index formed a 2-month rising wedge pattern. The price broke above the upper boundary of the wedge. It is bullish with an upside price target projected at 114.4.

 


 
Gold in 1-Month Descending Broadening Wedge Pattern

 

The gold index is forming a 1-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.

 

 
Silver in 2-Week Horizontal Trading Range Pattern

 

The silver index is forming a 2-week horizontal trading range pattern. It is neutral before the price breaks out from the range.

 

 
Crude Oil in 2.5-Month Descending Broadening Wedge Pattern

 

The crude oil index is forming a 2.5-month descending broadening wedge pattern. It is bearish before the price breaks above the the upper boundary of the wedge.

 


 
Asset Class Performance Ranking with US dollar 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 the US dollar is outperforming and oil is underperforming.

 

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