12/18/2022 – Market Update
Stocks Sliding
The stock market continued to slide last week. The S&P 500 index was bearish under its 89-day exponential moving average. Telecommunication, Internet, and Technology are ranked as the three worst sectors with mostly weak technical strengths. The stock market is in a short-term downward wave, and a short-term upward wave will be the next. The broad stock market is projected to be in a short-term bearish time-window until 12/21/2022.
Table of Contents
- Broad Market in Short-Term Bearish Time-Window
- Sector Performance Ranking with Home Construction Leading
- S&P 500 Index in Primary Corrective Wave A
- German DAX Index: Elliott Wave
- India Bombay Index Broke below 6-Week Ascending Broadening Wedge Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 1-Year Downtrend Channel Pattern
- US Dollar Breached above 2-Month Falling Wedge Pattern
- Gold Broke below 2-Month Rising Wedge Range Pattern
- Crude Oil in 7-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 74 on Friday 12/16/2022 (up from 40 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 bearish time-window until 12/21/2022.
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: 12/21/2022
Broad Market Instability Index (BIX): 74, above the panic threshold (bearish)
Momentum Indicator: negative (bearish)
Sector Performance Ranking with Home Construction 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 Home Construction, Oil Equipment, and Biotech. 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 it is in minor downward wave b. Minor upward wave c will be the next.
The S&P 500 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 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 Broke below 6-Week Ascending Broadening Wedge Pattern
The India Bombay Stock Exchange 30 Sensex index formed a 6-week ascending broadening wedge pattern. The price broke below the lower boundary of the wedge last week. It is bearish with a downside price target projected at 60500.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 2-month 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 Breached above 2-Month Falling Wedge Pattern
The U.S. dollar index formed a 2-month falling wedge pattern. The price breached the upper boundary of the wedge. It is bullish with an upside price target projected 106.5.
Gold Broke below 2-Month Rising Wedge Range Pattern
The gold 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 1740.
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 7-Week Downtrend Channel Pattern
The crude oil index is forming a 7-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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