Weekly Macro Review

March 19, 2022

Triple Play Review

The $SPY weekly chart held where it need to for the RSI bull range to remain intact.  We had noted markets looked rough coming into OpEx and FED week.  The fact that they had every reason and opportunity to break down and didn’t had us on alert for a potential change in character.  We needed to see buyers step in. The weekly candles show they did just that.  This left the RSI bull ranges viable for $SPY and $QQQ, maybe even $IWM if it can break above the zone and make a B-Line for the RSI 60 level. Being a weekly chart, this could take a minute though.

Daily level I have left on the wedge lines as well as some important levels above we will need to deal with if this rally is to progress.  RSIs also remain in RSI bear ranges, so all of this has a decent chance to fail, but with the $SPY and $IWM both in vacuums right now, there is a good chance we get more retirement higher even if the ultimate result does become a failure. If…

At this juncture I do slightly favor the RSI range shifts higher, but also think a little backfilling could help more robust setups develop.

On the intraday level, all three are in strong RSI bull ranges nearing the 80 RSI level for the $SPY and $QQQ. That doesn’t mean the move is over, but might get a little more choppy if we start to get divergences off these highs.  This would correspond with the idea of some ebb and flow, but doesn’t have to materialize.  A lockout rally into the end of the quarter is certainly on the table if portfolio managers start panic buying after having decade high cash levels recently.

Below we show the $YPS to $SPY relative comparative.  $YPS is the reverse weighted SP500 ETF. This is one I like to watch for relationships more than trading as it trades very thin, but what it does do is allow us remain in diversified large cap names, but see which end of the size spectrum in that group is performing right now.  This has been gaining ground relatively since late December, but stalled the last few week showing little edge. If it can break over the line that has capped it recently it would be a good sign the market is continuing to broaden out its participation

Intermarket and Style RS Rankings

The Intermarket picture improved this week for equities, but not enough to move any other than $IWM into the top half of the list. While many commodities were down this week, it wasn’t enough for them to lose the top rankings. Bonds were the big losers as the FED raised rates slightly. It will be interesting to see if bonds pressure lets up a little after the meeting or not. 

The Size and Style RS Rankings continue to be led by Value players. $VBR moved back to the top RS over the last week, but paled compared to all the growth segments in weekly returns. First sign of real growth Buying in months.  $MGV continues to waffle in its leadership as we see that rotation back to growth materialize

Power Universe

  • Longer Term:
  • NHNL Differential saw 3 straight positive days to end the week, but not enough to bring either moving average back positive with it.
  • Advance Decline Line breaking its downtrend on the strength.
  • %>200sma turned higher, but couldn’t clear 50%
  • Intermediate:
  • %>50sma moved back over 50% for 1st time in 2022.
  • McClellan Summation crossed higher this week with the strong breadth
  • Shorter Term:
  • %>20sma saw a strong thrust up to 79% on at the end of the week
  • McClellan Oscillator never wanted to break down, so it went the other way
  • Breadth Thrust didn’t react much on the last down move and put in solid move higher this week.
  • PMNLC (below) had a similar benign look as other short-term measures we noted last week and that changed as new 10 and 21 day highs surged throughout the Power Universe

The Power Universe put in a strong move off the Monday closing lows and is now challenging the trendline off the lower highs. RSI remains in a bear range, but nearing a high for 2022. A move over 60 for RSI would give the bull range shift we are looking for to confirm. It would also likely take price over the peak making a higher high as it moves out of this small bottoming base.

Our equal weight sectors didn’t see any dramatic RS moves this week, but a good bit of 1 spot changes. On the price performance it was a clear win for the most beaten down sectors. The only one to actually lose ground on the week was Energy, which still had enough quarterly outperformance to retain the top RS spot.

Going into next week, There was a lot of option premium that came off and you could feel the change in character as the week progressed.  There is a slim chance it was all OpEx related, so we will keep a close eye on the progress on all 4 pillars of relative strength.  There are many more sectors, subsectors, and themes that have setups now adding a little weight to the potential this time.  Make a list and set alerts so you are ready if price finds your levels, but realize the downtrend is still intact and buyers still have a lot to prove.

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!