Power Snapshots

May 25, 2024

The reports for our upcoming product launch are 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.

This Week's Highlights:

    • Three distinct weekly candles from the majors lack consensus for the week.
    • $IWM remains the anchor while breadth and momentum leak.
    • Friday’s rebound was good enough to neutralize a good bit of Thursday’s damage.
    • Pay attention to those that moved back up the most on Friday’s rebound action.

The weekly charts came out with indecision, expansion and rejection, in that order. All of it came on lower volume leading up to the holiday weekend. $SPY was sideways most of the week after a small gap up to start. Pretty much all of the up and down range came from Thursday’s candle. $QQQ extended its weekly breakout and still has plenty of room on RSI and CFG if wanted. $IWM was the rejection, what’s new, as it couldn’t clear the zone. It’s rejection of RSI at 60 is a small caution to keep an eye on here, but as mentioned it is going to be hard for $IWM to drop if $SPY $QQQ are marching on.

All three markets did a pretty good job on Friday eating into the big candles from Thursday. The volume dropped even further though as many checked out early, so it will depend on who shows up next week and who is vacationing. All of this is in the context of RSI bull ranges on this level still. $IWM’s struggles this week after hitting Nitrous late last week are similar to the small warning on the weekly chart. Something to keep an eye on here. $SPY and $QQQ still have that back test potential and a gap to close if it goes deep enough. This is if buyers don’t climb the big red candles early next week. It wouldn’t be a bad thing as long as $IWM doesn’t get loose during it.

From an intraday view, $QQQ was the winner, never losing the RSI bull range or the MA bands during the Thursday bear raid. $SPY popped right back above the MA bands and rebounded well. If it can get RSI back over 60 first of the week, it can save the current bull range, but just like $IWM last week, it is no certainty. The burden on this level is on the buyers to prove. Like the other levels, it wasn’t a great week for the small guys. This one has more to climb after a deeper retracement on Thursday. Even leading Friday’s action, it still came out in the most precarious position going into next week.

The bounce back on Friday saw incremental changes.

Same with RSI, the Friday strength dialed back overshoots from Thursday’s action leaving most sectors and subsectors still sitting in RSI bull ranges after the liquidation day.  Momentum is definitely not as strong. We entered the week as smaller names took the brunt of the selling and on Thursday the selling was broad and wide with higher, but not extreme volume.

Short term breadth was one sided after Thursday, so Friday’s action really did a good job of lessening the blow. Pay attention where buyers immediately jumped back in. Apparel & Luxury Goods and Broadline Retail both look good in Consumer Discretionary or Asset Management and Brokerage & Capital Markets in Financials as examples.

We needed to see some buying pressure come back, even if it wasn’t the best volume. It will let us start the week at neutral as opposed to on the defensive after a long holiday weekend.

Similar to the short term breadth, if you are still buying into this move, follow the green on a day right after a big down day and assess those charts first.

If you are worried, focus here. I will say, looking at where the most concentration is, it looks defensive with the exception of Independent Power & Renewables which remains a hot space. Health Care is still having a tough time as well. It is nice to see Consumer Discretionary off the hot seat for now too.

The Wrap up

Each of the three majors went in their own direction this week as the Power Universe leaked back into the breakout zone. The breadth and momentum cooled off to start the week and took a hit on Thursday, but that didn’t really change the bigger picture much. Technology as a sector and $QQQ as a proxy did the best to grind higher other than Thursday helping march the Information Technology relative strength ranking back up the list after a brief visit to the bottom while commodities did their thing. This could be the summer trend if the Tech and AI narrative continue. Right now it is Hardware & Equipment with Semiconductors running back higher as well, but Software is right at a breakout level too. IT Services is really the anchor of the sector right now trying to hold things down. I think this space deserves a closer look again this week. As for the markets as a whole, we start at Neutral on Tuesday from a short term perspective and see who shows up to start the week and end the month.

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!