12/25/2022 – Market Update
Look for Year-End Strength in Stocks
The stock market was choppy last week. Internet, Technology, and Telecommunication are ranked as the three worst sectors with mostly weak technical strengths. The stock market is near the end of a short-term downward wave. A short-term upward wave will be the next, hopefully, with typical year-end strength. The broad stock market is projected to be in a short-term bullish time-window until 1/13/2023.
Table of Contents
- Broad Market in Short-Term Bullish 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 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 in 3-Week Descending Triangle Pattern
- Gold in 3-Week Ascending Triangle Pattern
- Crude Oil in 3-Week Rising Wedge Pattern
- Asset Class Performance Ranking with Gold Leading
Broad Market in Short-Term Bullish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 35 on Friday 12/23/2022 (down from 74 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 1/13/2023.
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: 1/13/2023
Broad Market Instability Index (BIX): 35, below the panic threshold (bullish)
Momentum Indicator: negative (bearish)
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 Home Construction. Underperforming sectors are Internet, Technology, and Telecommunication.
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 has broken below the lower boundary of the wedge. It is bearish with a downside price target projected at 60500. This price target has been reached.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index formed a 2-month rising wedge pattern on daily chart. The price broke below the lower boundary of the wedge last week. It is bearish with a downside price target projected at 3020.
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 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 3-week Descending Triangle Pattern
The U.S. dollar index is forming a 3-week descending triangle pattern. It is neutral before the price breaks out from the triangle.
Gold in 3-Week Ascending Triangle Pattern
The gold index is forming a 3-week ascending triangle pattern. It is neutral before the price breaks out from the triangle.
Silver in 3-Month Rising Wedge Pattern
The silver index is forming a 3-month rising wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.
Crude Oil in 3-Week Rising Wedge Pattern
The crude oil index is forming a 3-week rising wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.
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 the US treasury bond is underperforming.
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