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01/29/2023 – Market Update

January 29, 2023 Leave a comment

 

Stocks Advanced Ahead of Next Week’s Fed Meeting

 

The stock market advanced last week. Oil Equipment, Precious Metals, and Home Construction were ranked as the top three sectors with mostly strong technical strengths. The S&P 500 index is near the end of its short-term upward wave. Next week’s Fed interest-rate decision will impact the market. The broad stock market is projected to be in a short-term bearish time-window until 2/17/2023.

 
Table of Contents

 

 

Broad Market in Short-Term Bearish Time-Window

 

The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 7 on Friday 1/27/2023 (down from 10 the previous week) which is below the panic threshold level of 42 and indicates a bullish market. The Wilshire 5000 index is above 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 2/17/2023.

 

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: peak
Date of Next Cycle Low: 2/17/2023
Broad Market Instability Index (BIX): 7, below the panic threshold (bullish)
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, Precious Metals, and Home Construction. Underperforming sectors are Utility, Consumer Goods, and Healthcare.

 

 

 
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 upward wave c.

 

The S&P 500 index is forming a 5-month ascending triangle pattern. It is neutral before the price breaks out from the triangle.

 


 
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 5-Week Descending Triangle Pattern

 

The India Bombay Stock Exchange 30 Sensex index formed a 5-week descending triangle pattern. The price broke below the lower boundary of the triangle. It is bearish with a downside price target projected at 58900.

 


 
Shanghai Composite Index: Intermediate-Term Pictures

 

The Shanghai Stock Exchange Composite index is forming a 3-month ascending broadening triangle pattern on daily chart. It is bullish before the price breaks below the lower boundary of the triangle.

 

In the following weekly chart, the Shanghai Stock Exchange Composite index formed a 1-year descending broadening wedge pattern. The price has broken above the upper boundary of the wedge. It is bullish with an upside price target projected at 3400.

 


 
US Treasury Bond in 3-Month Ascending Broadening Wedge Pattern

 

The 30-year U.S. treasury bond index is forming a 3-month ascending broadening wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.

 

 
US Dollar in 2.5-Month Downtrend Channel Pattern

 

The U.S. dollar index is forming a 2.5-month downtrend channel pattern. It is bearish before the price breaks above the upper boundary of the channel.

 


 
Gold in 3-Month Rising Wedge Pattern

 

The gold index is forming a 3-month rising wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.

 

 
Silver in 8-Week Ascending Triangle Pattern

 

The silver index is forming a 8-weeks ascending triangle pattern. It is neutral before the price breaks out from the triangle.

 

 
Crude Oil in 2.5-Month Ascending Triangle Pattern

 

The crude oil index is forming a 2.5-month ascending triangle pattern. It is neutral before the price breaks out from the triangle.

 


 
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.