09/11/2022 – Market Update
Stocks Rebounding
The stock market rebounded last week. The market volatility dropped back to normal as readings of our Broad Market Instability index got below the panic threshold level. The S&P 500 index started minor upward wave 2 inside the third intermediate downward wave. Energy, Utilities, and Biotech are ranked as the top three sectors with mostly strong technical strengths. The broad stock market is projected to be in a short-term bullish time-window until 9/26/2022.
Table of Contents
- Broad Market in Short-Term Bullish 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 3-Month Ascending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Broke below 2-Month Rising Wedge Pattern
- US Dollar Broke Below 1-Month Rising Wedge Pattern
- Gold in 1-Month Descending Broadening Wedge Pattern
- Crude Oil in 2-Month Descending Broadening Wedge Pattern
- Asset Class Performance Ranking with US dollar Leading
Broad Market in Short-Term Bullish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 11 on Friday 9/9/2022 (down from 106 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is at the 89-day exponential moving average, and the momentum is near zero. 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 9/26/2022.
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: 09/26/2022
Broad Market Instability Index (BIX): 11, below the panic threshold (bullish)
Momentum Indicator: near zero (neutral)
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 Biotech. Underperforming sectors are Precious Metals, Telecommunication, 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 upward wave 2.
The S&P 500 index is forming a 4-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 in 3-Month Ascending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index formed a 3-month ascending broadening wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 2-month symmetric triangle pattern on the daily chart. It is neutral before the price breaks out from the triangle.
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 Below 1-Month Rising Wedge Pattern
The U.S. dollar index formed a 1-month rising wedge pattern. The price broke below the upper boundary of the wedge last week. It is bearish with a downside price target projected at 107.
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 Broke above 1-Month Downtrend Channel Pattern
The silver index formed a 1-month downtrend channel pattern. The price broke above the upper boundary of the channel. It is bullish with an upside price target projected at 19.50.
Crude Oil in 2-Month Descending Broadening Wedge Pattern
The crude oil index is forming 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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