10/16/2022 – Market Update
Choppy Market
The stock market was choppy last week. The market volatility further reduced as readings of our Broad Market Instability index dropped below the panic threshold level. Energy, Biotech, and Oil Equipment are ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index has formed 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
- Sector Performance Ranking with Energy Leading
- S&P 500 Index in Primary Corrective Wave A
- German DAX Index: Elliott Wave
- India Bombay Index Broke above 4-Week Descending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 10-Month Descending Broadening Wedge Pattern
- US Dollar in 4-Week Symmetric Triangle Pattern
- Gold Broke in 1.5-Month Descending Broadening Wedge Pattern
- Crude Oil in 3-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 25 on Friday 10/14/2022 (down from 125 the previous week) which is below the panic threshold level of 42 and indicates a bullish 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: upward
Date of Next Cycle High: 10/19/2022
Broad Market Instability Index (BIX): 25, below the panic threshold (bullish)
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, Biotech, and Oil Equipment. Underperforming sectors are Precious Metals, Semiconductors, and Internet.
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 5-week falling 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 above 4-Week Descending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index formed a 4-week 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 59500.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index formed a 1.5-month falling wedge pattern on daily chart. The price broke above the upper boundary of the wedge last week. It is bullish with an upside price target projected at 3160.
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. This price target has been reached.
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 4-Week Symmetric Triangle Pattern
The U.S. dollar index is forming a 4-week symmetric triangle pattern. It is neutral before the price breaks out from the triangle.
Gold in 1.5-Month Descending Broadening Wedge Pattern
The gold index is forming a 1.5-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
Silver in 1-Month Symmetric Triangle Pattern
The silver index is forming a 1-month symmetric triangle pattern. It is neutral before the price breaks out from the triangle.
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.
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