01/29/2023 – Market Update
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
- 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 5-Week Descending Triangle Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond in 3-Month Ascending Broadening Wedge Pattern
- US Dollar in 2.5-Month Downtrend Channel Pattern
- Gold in 3-Month Rising Wedge Pattern
- Crude Oil in 2.5-Month Ascending Triangle 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 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.
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