09/04/2022 – Market Update
Stocks Extended Losses
Stocks fell in volatile trading last week. Readings of our Broad Market Instability index surged above 100. The S&P 500 index nears the late part of minor downward wave 1 inside the third intermediate downward wave. The US dollar hit 20-year high. 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 9/7/2022.
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 7-Week Rising Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Broke below 2-Month Rising Wedge Pattern
- US Dollar Broke above 5-Week Falling Wedge Pattern
- Gold in 4-Month Descending Broadening Wedge Pattern
- Crude Oil 2-Month Descending Broadening Wedge Pattern
- Asset Class Performance Ranking with US dollar Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 106 on Friday 9/2/2022 (up from 42 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 9/7/2022.
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: downward
Date of Next Cycle Low: 09/07/2022
Broad Market Instability Index (BIX): 106, 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, Utilities, and Consumer Goods. 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. Now it is in minor downward wave 1.
The S&P 500 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 3900.
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 7-Week Rising Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index formed a 7-week rising wedge pattern. The price broke below the lower boundary of the wedge. It is bearish with a downside price target projected at 56500.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 7-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 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 5-Week Falling Wedge Pattern
The U.S. dollar index formed a 5-week falling wedge pattern. The price has broken above the upper boundary of the wedge. It is bullish with an upside price target projected at 108.5. This price target has been reached.
Gold in 4-Month Descending Broadening Wedge Pattern
The gold index is forming a 4-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
Silver in 4-Month Descending Broadening Wedge Pattern
The silver index is forming a 4-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
Crude Oil in 2-Month Descending Broadening Wedge Pattern
The crude oil index formed a 2.-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 the US treasury bond is underperforming.
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