Mid-Week Macro Review

March 23, 2022

Triple Play Review

Floored since the FED

Since last week markets have been on a tear.  As we mentioned then, once the FED got past we could see more relief and we have, with all the strength, it hasn’t pulled us out of the muck just yet.  All three of the majors on the TP Daily chart have put in decent reversals off the lows.  $SPY and $QQQ have extended more, but as I mentioned in a tweet this morning, the $IWM actually has the best looking setup at the moment.  Even with this, a few days of backfill and digestion would be good for both structure and setups as long as buyers stay engaged and don’t pull the proverbial rug. 

Triple Play

SPY is the only of the three that did not make a new closing low on the 65min chart recently and is first back above the MA bands. and looking to challenge RSI bear range next.

QQQ pierced the previous lows, closed a candle down there and put in a nice reversal since.  Today’s action (not shown) so far is adding to this and now up testing the down trend off the left side highs.

IWM put in a divergence against the last set of lows, but didn’t make new ones versus the February spike lows.  This one has the longest to move for and RSI bull range shift, but can do it if we see buyers bite on this move.

Intermarket View

Commodities are taking quick hits, but overall continue to power higher.  $GLD $SLV have been coming in some, but are currently oscillating around the 5 day moving averages. They are all still holding the top half of the Intermarket rankings except for $SPY which pushed its way in after this hard run. The rest of the equities proxies are not there yet, so we are still skeptical,  but moving in the right direction.

Value vs Growth

Value remains on top of this ranking list across all segments. Small Value has been punching higher in recent weeks. Small growth leads that style, but still bottom anchoring the list with all the growth segments.

Power Universe

The move of the recent lows has been broad and strong as shown by our equal weighted Power Universe. Price is breaking the downtrend of the highs as it tries to shift the RSI back to a bull range. It hasn’t shifted yet either, but will likely do so if it clears this polarity level we closed as yesterday. Some digestion before attempting the break might give it a little better odds of holding.

Universe Breadth

  • Overall Breadth has put in a strong showing over the last week, but still needs work
  • The cumulative advance decline line moving with price
  • The percent of stocks above their 20 moving average above 80% and 50 over 50%
  • .200 day stuck under 50% showing longer term charts not yet on the mend.
  • Breadth Thrust getting near previous peaks in a nice thrust, but at this point it could use a bit of rest
  • The McClellan Summation moving nicely away from the signal line and should challenge the flatline next.

Short-Term Breadth

Short term Breadth measures have actually run strong since the lows last Monday, pre FED. They were already showing improvement, we just had the get the meeting and uncertainty out of the way.  Now the list is looking quite hot and in need of some rest, even if it is in short gasps.  However, it will be good to see how each area holds up during any challenge if you think this is a more durable bottom.  The ones that hold up the best in the next week or few should develop the best looking setups inside.

Sectors and Beyond

in the equal weight sector list we see Information Technology climbing the most over the last week, but still only to a 45 on our 3mo RS measure. Energy and Materials commodity and inflation plays continue to dominate.

Below that we show the subsectors that moved the most RS points over the last week. Much more growth oriented up top, but some Financial and Industrial spaces in there as well.

Wrap Up

We held the retest and came off those lows fast over the last 6-7 days. Buyers are participating right now, but also still a lot of fear of just normal retracement in a bear market. Both sides have a good case to argue here, so we will just have to see who wins the battle in the coming days. It would be great to digest and consolidate the recent move off the lows without give back a large chunk; then be watching for who stands out in the rotation that is likely to be involved.

 

You can find these and other charts on our Stocktwits and Twitter feed @Power1nvesting and throughout this site. Anything mentioned is for education purposes only and are not meant to be recommendations to buy or sell any securities. Please see the full disclosure in the footer for more information.

As always, I hope this helps!