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10/09/2022 – Market Update

October 10, 2022 Leave a comment

 

Looking Forward to a Short-Term Bottom on Stocks

 

The stock market had a roller-coaster week with big up and down moves last week. The market volatility has reduced a lot. Energy, Oil Equipment, and Home Construction are ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index should be forming a short-term bottom, and short-term upward wave 2 will the next. The broad stock market is projected to be in a short-term bullish time-window until 10/19/2022.

 
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 125 on Friday 10/7/2022 (down from 373 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 bullish time-window until 10/19/2022.

 

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: valley
Date of Next Cycle High: 10/19/2022
Broad Market Instability Index (BIX): 125, 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, Oil Equipment, and Home Construction. Underperforming sectors are Real Estate, Telecommunication, and Precious Metals.

 

 

 
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 near the end of minor downward wave 1. Minor upward wave 2 will be the next.

 

The S&P 500 index is forming a 2-month 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 4-Week Descending Broadening Wedge Pattern

 

The India Bombay Stock Exchange 30 Sensex index is forming a 4-week descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite 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.

 

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 in 10-Month Descending Broadening Wedge Pattern

 

The 30-year U.S. treasury bond index is forming a 10-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.

 

 
US Dollar in 2-Month Ascending Broadening Wedge Pattern

 

The U.S. dollar index is forming a 2-month ascending broadening wedge pattern. It is bullish before the price breaks below the lower 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 last week. It is bullish with an upside price target projected at 1760.

 

 
Silver Broke above 2-Month Symmetric Triangle Pattern

 

The silver index formed a 2-month symmetric triangle pattern. The price broke above upper boundary of the triangle last week. It is bullish with an upside price target projected at 21.3.

 

 
Crude Oil in 3-Month Descending Broadening Wedge Pattern

 

The crude oil index is forming a 3-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 US treasury bond is underperforming.