11/06/2022 – Market Update
S&P 500 Failed at 89-Day Exponential Moving Average
Stocks pulled back last week. The S&P 500 index failed to break above its 89-day exponential moving average and the short-term upward wave approached the end. Crude oil started to move upwards after its price broke above the upper boundary of a 4-month descending broadening wedge pattern. Internet, Technology, and Precious Metals are ranked as the three worst sectors with mostly weak technical strengths. The 30-year U.S. treasury bond is still bearish. The US dollar, gold and silver are neutral. The broad stock market is projected to be in a short-term bearish time-window until 11/17/2022.
Table of Contents
- Broad Market in Short-Term Bearish Time-Window
- Sector Performance Ranking with Oil Equipment Leading
- S&P 500 Index in Primary Corrective Wave A
- German DAX Index: Elliott Wave
- India Bombay Index in 6-Week Rising Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 11-Month Descending Broadening Wedge Pattern
- US Dollar in 7-Week Descending Triangle Pattern
- Gold 2-Month Horizontal Trading Range Pattern
- Crude Oil Breached above 4-Month Descending Broadening Wedge Pattern
- Asset Class Performance Ranking with Oil Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 40 on Friday 11/4/2022 (up from 23 the previous week) which is near the panic threshold level of 42 and indicates a neutral market. The Wilshire 5000 index is below the 89-day exponential moving average, and the momentum is positive. 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 11/17/2022.
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: 11/17/2022
Broad Market Instability Index (BIX): 40, near the panic threshold (neutral)
Momentum Indicator: positive (bullish)
Sector Performance Ranking with Oil Equipment 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 Oil Equipment, Energy, and Biotech. Underperforming sectors are Internet, Technology, 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 in minor upward wave 2, and minor downward wave 3 will be the next.
The S&P 500 index is forming a 1-month rising wedge pattern. It is neutral before the price breaks out from 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 6-Week Rising Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 6-week rising 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 6-week descending broadening wedge pattern on daily chart. 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 is forming a 1-year descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
US Treasury Bond in 11-Month Descending Broadening Wedge Pattern
The 30-year U.S. treasury bond index is forming a 11-month descending broadening wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
US Dollar in 7-Week Descending Triangle Pattern
The U.S. dollar index is forming a 7-week descending triangle pattern. It is neutral before the price breaks out from the triangle.
Gold in 2-Month Horizontal Trading Range Pattern
The gold index is forming a 2-month horizontal trading range. It is neutral before the price breaks out from the range.
Silver in 6-Week Horizontal Trading Pattern
The silver index is forming a 6-week horizontal trading range. It is neutral before the price breaks out from the range.
Crude Oil Breached above 4-Month Descending Broadening Wedge Pattern
The crude oil index formed a 4-month descending broadening wedge pattern. The price breached the upper boundary of the wedge last week. It is bullish with an upside price target projected at 112.
Asset Class Performance Ranking with Oil 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 oil is outperforming and US treasury bond is underperforming.
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