02/26/2023 – Market Update
S&P 500 Testing 89-Day Exponential Moving Average
The stock market declined last week. The market volatility raised as readings of our Broad Market Instability index went up above the panic threshold level. Telecommunication, Utilities, and Real Estate 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 2/28/2023.
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 in 2-Month Broadening Symmetrical Triangle Pattern
- Shanghai Composite Index: Intermediate-Term Pictures
- US Treasury Bond Broke below 3-Month Ascending Broadening Wedge Pattern
- US Dollar in 4-Week Rising Wedge Pattern
- Gold in 4-Week Falling Wedge Pattern
- Crude Oil in 3-Month Ascending Triangle Pattern
- Asset Class Performance Ranking with US Dollar Leading
Broad Market in Short-Term Bearish Time-Window
The Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, closed at 65 on Friday 2/24/2023 (up from 23 the previous week) which is above the panic threshold level of 42 and indicates a bearish 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 2/28/2023.
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: downward
Date of Next Cycle Low: 2/28/2023
Broad Market Instability Index (BIX): 65, above the panic threshold (bearish)
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, Home Construction, and Semiconductors. Underperforming sectors are Telecommunication, Utilities, and Real Estate.
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 starting intermediate downward wave (3), and it is going to have minor 1-2-3-4-5 five-wave sequence. Currently it is in minor downward wave 1.
The S&P 500 index is forming a 5-month rising wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.
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 2-Month Broadening Symmetrical Triangle Pattern
The India Bombay Stock Exchange 30 Sensex index is forming a 2-month broadening symmetrical triangle pattern. It is neutral before the price breaks out from the triangle.
Shanghai Composite Index: Intermediate-Term Pictures
The Shanghai Stock Exchange Composite index is forming a 5-week horizontal trading range between 3220 and 3300. It is neutral before the price breaks out from the range.
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 Broke below 3-Month Rising Wedge Pattern
The 30-year U.S. treasury bond index formed a 3-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 126. This price target has been reached.
US Dollar in 4-week rising wedge Pattern
The U.S. dollar index is forming a 4-week rising wedge pattern. It is bullish before the price breaks below the lower boundary of the wedge.
Gold in 4-Week Falling Wedge Pattern
The gold index is forming a 4-week falling wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
Silver in 4-Week Falling Wedge Pattern
The silver index is forming a 4-week falling wedge pattern. It is bearish before the price breaks above the upper boundary of the wedge.
Crude Oil in 3-Month Ascending Triangle Pattern
The crude oil index is forming a 3-month ascending triangle pattern. It is neutral before the price breaks out from the triangle.
Asset Class Performance Ranking with US Dollar 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. The US dollar is outperforming and the US treasury bond is underperforming.
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