Power Snapshots

June 6, 2024

Highlights:

    • Large caps breakout out and small caps just hold where they have to.
    • Health Care takes the top RS spot. 
    • Semiconductors lead Information Technology to a nice reversal day

$SPY and $QQQ break out to new all time highs in strong RSI bull ranges. $IWM just holds where it had to to keep the RSI bull range in check and some bullish undertones since it resisted closing the gap. Breadth was better as a small consolation prize.

$SPY and $QQQ both shifted back to RSI bull ranges right as they were breaking out and never looked back, closing the day on Nitrous. The little guys did hold the line and bounce well today. They are definitely still the anchor, but don’t seem to be holding the other two back with powerhouses in Information Technology running hard today.

There is it, Health Care back in the top 3 month relative strength list. It’s been brewing for a couple of weeks as noted in previous reports. Information Technology snapped back hard today leading the gains with many big winners, not just $NVDA as it was actually the 45th best performing Information Technology name in the Power Universe. Utilities and Consumer Staples were the only two negatives and Real Estate eked out a small gain. Defensives took a back seat. You can see I highlighted three in the RS movers section that we have been focusing on in recent reports. While Consumer Discretionary and Communication Services weren’t leaders today, their RS progress is still encouraging.

Even with them not performing today, Real Estate and Utilities are two of the sectors still showing some longer term strength in these readings. Financials are there too, but getting kind of bifurcated like we have seen in Consumer Discretionary recently. Banks are struggling after talk about insolvency heats back up. It’s not a good look for the space, higher interest rates means more margins, but also more defaults which is the fear at this point, valid or not. 

Today helped. The few oversold Tech spots bounced hard today as they often do when CFG’s are that low. It could still diverge with another lower low, but that’s to be seen. For today, it helped propel Information Technology to the top gainer. Software is bouncing where it needs to on both the EW sector and names like $IGV. $SMH was well out front for the day though. All eyes on the $NVDA split at the end of the week.

Short-term breadth remains mixed. Energy is still sucking wind while Health Care, Information Technology, Consumer Discretionary and Real Estate are all responding well to today’s action.

From this angle, Industrials saw some strong buying under the surface, but is not showing up yet in other measures. This could mean the sector is ready to turn around here after sitting on a ledge the last few days on the $XLI chart. Information Technology also saw good pressure behind the buying today. Not surprisingly, Semiconductors were the only 100% on the buy side today which doesn’t happen that often in sectors with 50+ stocks.

It was a good day, but still only affecting the short term highs so far in most spaces. Semiconductors and Aerospace & Defense are the only two subsectors that have already spread to the longer term. Apparel & Luxury Goods is working on it.

The hard hit on Energy is still showing and will until it can get some traction. The sector was up a little yesterday, but not enough to offset the short and intermediate damage here. Energy also is going into a tougher seasonal period, so getting that traction will be a feat. On a big up day like today, to see any pink here is not usual, so note them. Consumer Staples are still letting us know that defensives are usually not the place to concentrate in a broad market uptrend.

The Wrap Up

Buyers showed up again where they needed to and not only bid the $SPY and $QQQ to new all time highs, but also helped $IWM hold where it needed to. The buying was broad, but there are definitely still soft spots underneath the surface. Follow the rotation and leadership spaces here as we emerge from this consolidation. Large caps are there, now it would be good to see the broader market follow along and let $IWM get its near term breakout out of the way.

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As always, I hope this helps!