Mid Week Macro 2/16/2022

Triple Play Depth

Here mid-week the daily Triple Play charts are bouncing around like a ping-pong ball. Volatility remains the name of the game as the downtrend persists.  $IWM is leading short term and is back into its MA bands and over the 9sma, while $SPY QQQ both still have a bit to go to get to their respective levels.  The battle here between the January lows and February highs is raging to see if the next short term leg is up or down.  Overall the RSI bear ranges continue to tug lower, but price isn’t convinced just yet.

On the 65 minute level the charts almost look like Fractals of the larger time frame, but not quite. There is a little bifurcation on this level as the $IWM is currently in a RSI bull range and over the MA bands after testing the RSI 40 level in Friday. This is a change of character worth noting if it shows relative strength today and into the rest of the week. All that is said with the over riding view that $SPY $QQQ are still in RSI bear ranges and outweight (literally and figuratively) the $IWM standing on its own in the bull range camp.  The larger names need to see some buyers to help push through the MA bands and get the RSI bull range shift in coming days. If they don’t show up, then a hard restest of the lows gets more attention.

The 65 Minute view of the TP Charts did shift back into RSI bull ranges during this bounce and turned the MA bands up in the process. This was needed, now it will be important to see how the RSIs act when price gets challenged over the short term

Universe Breadth

  • Breadth is still muddling, but the progression from short measure improvement to longer measures continues.
  • Short-term measures are holding higher on challenges like Friday and into Monday.
  • NHNL Differential slowly improving, but needs to pull the 30ma back positive to reset.
  • McClellan Summation also holding the buy signal and reacting less to the Monday selloff
  • %>20MA is back at the highs for the move ahead of price
  • Longer MA breadth measures still need work

Breadth Washout

Short Term breadth showed a nice rebound yesterday and was looking up across the markets with the exception of Utilities which can’t seem to catch any traction.  Green notables on the 10day new highs column shows a nice broad move yesterday.

Finally, we take the same view as of last nights close.  A drastic difference in where things stand and a great opportunity to compare and see what areas made the most improvement.  We made comments as these were showing, but its nice to be able to set them side by side and compare.  It is not just about knowing we are washed out, but also knowing where to look for the best rebound potential.

Large over Small

Last week we saw this relative comparative chart close to the second red arrow. This was a critical spot for comparing large-cap tech to small-caps. The rotation into IWM continued and is currently at another important spot. A breakdown here further confirms the recent strength in IWM. The other view is that QQQ begins to outperform from here and we go back up to test the highs. Both options could happen, but for now the chart shows three fails by QQQ to further outperform IWM.


The VIX spiked and closed outside of the upper bollinger band for 7 consecutive days before finally closing back within. Early this week the second spike failed to close outside of the band. As seen by the black arrows, the previous instances proved to be followed by decreases in volatility. However, on an absolute level the VIX is at 26. We can expect prices to be more volatile than usual at this level.

Wrap Up

While the markets have bounced hard out of the extremes, we are now entering the harder part of the move.  Direction will be less clear for a few days until the buyers and sellers resolve their issues.  The resistance we are coming into on most indexes here shortly will likely serve as the battleground.  Don’t be too quick to choose a side as both have points in their favor, but at the moment we need to respect the bearish action that got us here and not let our guard down.