12/11/2022 – Market Update
Stocks Retreated from Short-Term Upward Wave
The stock market pulled back last week. The S&P 500 index turned bearish after its price broke below the lower boundary of a 2-month rising wedge pattern. Telecommunication, Internet, and Technology 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 12/20/2022.
Table of Contents
- Broad Market in Short-Term Bearish Time-Window
- Sector Performance Ranking with Biotech Leading
- S&P 500 Index in Primary Corrective Wave A
- German DAX Index: Elliott Wave
- India Bombay Index in 6-Week Ascending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 1-Year Downtrend Channel Pattern
- US Dollar in 2-Month Falling Wedge Pattern
- Gold in 2-Month Rising Wedge Range Pattern
- Crude Oil in 6-Week Downtrend Channel Pattern
- Asset Class Performance Ranking with Gold 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 12/9/2022 (up from 4 the previous week) which is close to the panic threshold level of 42 and indicates a neutral market. The Wilshire 5000 index is at 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 12/20/2022.
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: 12/20/2022
Broad Market Instability Index (BIX): 40, near the panic threshold (neutral)
Momentum Indicator: negative (bearish)
Sector Performance Ranking with Biotech 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 Biotech, Healthcare, and Home Construction. Underperforming sectors are Telecommunication, Internet, and Technology.
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. Based on recent market movement, the S&P 500 index is still in intermediate upward wave (2), and it is going to have minor a-b-c three-wave sequence. Currently minor upward wave a is ending, and minor downward wave b is starting.
The S&P 500 index formed a 2-month rising wedge pattern. The price broke below the lower boundary of the wedge. It is bearish with a downside price target projected at 3800.
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 upward wave (2).
India Bombay Index in 6-Week Ascending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 6-week 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 7-week rising wedge pattern on daily chart. It is bullish before the price breaks below the lower boundary of the wedge.
In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 1-year descending broadening wedge pattern. The price broke above the upper boundary of the wedge. It is bullish with an upside price target projected at 3400.
US Treasury Bond in 1-Year Downtrend Channel Pattern
The 30-year U.S. treasury bond index is forming a 1-year downtrend channel pattern. It is bearish before the price breaks above the upper boundary of the channel.
US Dollar in 2-Month Falling Wedge Pattern
The U.S. dollar index is forming a 2-month falling wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
Gold in 2-Month Rising Wedge Range Pattern
The gold index is forming a 2-month rising wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.
Silver in 2-Month Rising Wedge Pattern
The silver index is forming a 2-month rising wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.
Crude Oil in 6-Week Downtrend Channel Pattern
The crude oil index is forming a 6-week downtrend channel pattern. It is bearish before the price breaks above the upper boundary of the channel.
Asset Class Performance Ranking with Gold 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. Gold is outperforming and oil is underperforming.
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