Power Snapshots

May 23, 2024

The reports for our upcoming product launch are now coming together and taking shape. As you can see, the Triple Play charts have been successfully integrated into the Power Snapshots section. This integration provides valuable context and background information before we dive deeper into the Power Snapshots to examine how the high-level activity and performance metrics are broken down and manifested under the hood.

Today's Highlights:

    • Very light volume again, but with weaker breadth than on Monday.
    • Consumer Discretionary and Health Care are still struggling and are lighting up pink on any market weakness.
    • Utilities are starting to prove they are more than just a defensive safe haven.

After yesterday’s stall, all three gave some back today. Of course, small caps were the anchor and the rest was just jockeying before the $NVDA announcement which went well. $IWM is the only one that looks like a reversal here so far, it’s still well above the rising MA bands with some room to give. $SPY and $QQQ still have a back test that would make sense and cool things off plenty.

Intraday, the $IWM broke the MA Bands and lost the RSI bull range (technically), but can put in a spike with a rebound tomorrow. It is the weakest, so we will watch for its lead, but I think the large caps might have something to say about that. If the AI trade lifts today with NVDA, it is more likely to pull the $IWM with it than it is to turn out the other way around. Two of three are in strong RSI bull ranges; the majority voting block usually wins in the end.

Not much change here, $IWM was down more than $SPY and $QQQ and helped pull these numbers in some today. It is still a solid positioning overall. Semiconductors were one of the few positives today as we waited for $NVDA earnings. Those who went into the number with confidence look to be getting rewarded this morning.

Another day of softening in RSI bull ranges. Diversified Consumer Services has an interesting setup as it has been caught up in the Consumer Discretionary relative weakness. It is in an RSI bull range, on Nitrous with CFG below zero. This recently broke out ahead of the Power Universe from a 4 month base and is now back testing that breakout. You can see its chart and everything under the hood here to dig a little deeper on the idea. 

That pink that was creeping in yesterday spread like a virus into Tuesday, not much for buying in most sectors. Information Technology was a welcome standout as it has been on the back burner for a few weeks. Now that most of the big tech earnings are winding down maybe the sector can have some fun this Summer and lead the rally again. It hasn’t really led our RS rankings list for months while Commodities took their turn.

The one foot out the door market strikes again! Selling was strong across a chunk of the subsectors. Commodity plays took the brunt of it and maybe a warning for the summer in that space, but it’s too early to tell just yet. Energy looked like the subsectors were about to emerge from small bases, but yesterday put a big dent in that theory. How they end the week will be important. Consumer Discretionary has been leaking and saw that continue on Tuesday as the selling there intensified as well. It was just one day and the volume grew, but not by much, so I am not reading too much into it.

I wouldn’t expect much on a down day like that, but Information Technology may be trying to get a message out in the fog of selling.

New lows kicked up with the selling and expanded quickly as small caps try to lead down. I am not sure they have the pull necessary to turn the tide if the large and midcap spaces are performing. Mid-cap ETFs were actually the top performers yesterday, even with the Small cap weakness and breadth weakness. Mid-caps are my favorite segment of the markets and they tend get forgotten in the mix, but perform very well in a longer term bull trend.                             

The Wrap up

We got a sell day. It didn’t effect $SPY and $QQQ much, but pulled in the $IWM and our Power Universe some as well. If we don’t get follow through, it was just a day of profit taking with a little fear mixed in. If we do get follow through, then we see where the money is rotating to. As we always remind ourselves, rotation is the lifeblood of a market trend. As long as the money is rotation within the equity markets via sector and style rotation, we can find opportunity. It is only when it rotates out of the asset class altogether that we should begin to be concerned, and those tend to be big footprints when it does leave.

This information is for educational purposes only and is not a recommendation.  Please see the full disclosure in the footer.

As always, I hope this helps!