Power Snapshots

June 17, 2024

Highlights:

    • Pop on better data doesn’t last in the broader markets.
    • Breadth keeps narrowing short term, but longer term measures are starting to notice.
    • Real Estate continues to emerge with the rate narrative.
    • New Lows begin expanding across the timeframes.

Markets continue to concentrate this week showing clearly in the weekly differences between $SPY, $QQQ and $IWM. The larger two are still in strong RSI bull ranges and moving higher. They are getting extended from the MA bands. That will narrow – a pullback to the bands would be the quickest way to close it, but the MA bands could also play catch up on any sideways action. $IWM is sitting on the top band as the weekly inverted hammer stopped right there to end the week. $IWM was the only one on higher volume, which isn’t great for the little guys.

The two big guys closing the week near highs in strong RS bull ranges. $QQQ is nearing 80, but that in itself just shows strength and is not a reason to sell. We are also seeing the 45ema of RSI (blue line on RSI chart) move above 60 on the larger indexes. I marked where this happened at the end of 2024. You can see both trended for a while once this happened, even though the RSIs were back and forth grinding the entire way. We also need to note the $IWM crossed two, quickly failed and has been sideways since. The $IWM RSI is nearing 40 now which really needs to hold or we are likely heading for a retest of the April lows. 

From an intraday perspective, $QQQ is the most extended here and on its second trip above 80. This can persist a while, but makes liquidation breaks more likely to try and reset the momentum. That said, momentum this strong is hard to guess how long it will continue. $SPY looks better set up to continue higher or maybe take the baton for a bit. $IWM has been diverging all week, but can’t find a bid. The falling wedge could pop higher, but it is still in an RSI bear range which needs to change to get anything going on the upside. Right now buyers have a lot to prove in the small caps and getting back over 200 is the first hurdle.

Information Technology and Real Estate were the only two that put in gains this week, but not by much. Real Estate has been firming up as rates start to ebb. It was a tough week for most spaces with the Wednesday gap higher getting fully retraced and then some. That was not a good look for equities from a broad market perspective as breadth unwound a lot this week.

Moving average breadth continues to narrow with Commodities taking a lot of heat this week along with Financials and Utilities. The interest rate narrative reaped the most havoc this week in these spaces.

Momentum has all but disappeared this week. Any momentum is subsector specific with most of it being in Technology and Real Estate. 

Pink, but not red enough to lean on.

The selling Friday was broad, but not that aggressive. $IWM took most if it for the week, but a lot of S&P500 names aren’t participating either at this point.

Tumbleweeds…

 

Getting red here, but still room if sellers want to push. Lows are spreading across the time frames quickly here, so this raises a caution of short term breakdowns while $IWM continues to fumble around.

The Wrap Up

The data came in better than expect this week and that moved a lot of interest rate narrative spaces. Some up and some down, the problem is most of what went up with the news retraced before the end of the week. This type of price action alone doesn’t bode well for the broader markets, but the $SPY and $QQQ can keep going a while and very possibly through this week’s OpEx. If we do finally see some money come out of the highest flying mega caps, we really want to see it spread around elsewhere right away. If it just leaves, that will be a bigger message.

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As always, I hope this helps!