Weekly Macro Review

March 06, 2022

Chart Highlights

Weekly Triple Play charts didn’t really improve this week, They tried, but in the end closed lower across the board as the MA bands were rejected for now.  The chart below notated the $SPY is still holding the RSI bull range as price sites on this ledge deciding whether or not to jump.  Geopolitical issues are still roaring and commodity inflation ran hard for another week. Nothing here favors, equities, but I noted in the video, in the shorted timeframe on Friday, the  65min Chart continued to hold up pretty well when the bears had every chance to take it down. That doesn’t mean we won’t go there, but it does keep us alert for a fast retrace if any good news sticks for more than a few hours. So basically the lowest timeframe is showing some resolve, but the higher timeframes show the sellers are still dominating a large portion of the markets.

Once again we have Latin America and Middle East leading the charge here. While US indices moved higher with $SPY RS ranking at 52, $IWM at 48 and $QQQ way down at 30, those numbers show decent jumps in the US rankings around the world, but certainly not something to hang your hat on.

The Intermarket view continues down the same path with a few highlights that send subtle messages. First, we see that $JJC finaly making its move and showing its industrial roots with $SLV, both of which are over $GLD now.  So this is likely more about inflation than fear still at this point.  Next, seeing $TLT and $IYR making RS moves this week could be an early hint that yields might be ready to cool off for a bit, which will probably have other ripple effects. It is a pretty clear difference over the quarterly returns we see with nothing flat. The effects we have seen over the last quarter with the confluence of inflationary pressures and geopolitical fear have been eye opening. A change of character here would be something notable, but we need to see it first.

This week we separate out the measures we follow by long, intermediate and short term and look at them separately as their message are all slightly different at the moment leaving uncertainty relatively high.

  • Longer Term:
  • NHNL full sell signal and 10ma below the 30ma
  • Advance Decline Line following price.
  • %>200sma weak and bouncing around below 50%
  • Intermekdiate:
  • %>50sma oscillating below 50%
  • McClellan Summation has been sideways for more than a week, but missed a chance at a cross this week. Might be working up steam for another attempt, or be ready for a quick fail.
  • Shorter Term:
  • %>20sma poked above 50% mid-week then got rejected again. Any strength is still getting sold into.
  • McClellan Oscillator did spend more time above zero than below this week. That is a potential positive, but no thrust behind it at all, more like it’s trying to keep its footing.

Energy came roaring back this week after a quick respite, it continues to be in its own world right now. Utilities were the next best performer then Materials. Those were the only positives on the week. Real Estate eked out a slight positive, but not really a gain. However, The RS rankings have been pretty benign over the last quarter and it has been fairly stable comparatively. Now the charts are setting up and the Subsectors are making some moves in the rankings.  Making a big RS move, but not showing in our weekly index, Health Care seems to be perking up on the  mid to large names, which are making notable moves after owning the bottom RS rankings for a while now. You can see some of the highlights in the extra charts below that I touched on in the video, and more in-depth analysis of this in the Sector Review Video that I will put a link to here once it is complete.

Looking at the RS gainers and Losers in our equal weighted subsectors, you can see defensive names are still dominating ever here with Real Estate as mentioned above and Utilities littering the list and some of the best gainers on the week outside Energy and Metals.  In the RS loser we see financials dominating with a lot of consumer Discretionary as well. This feels like another hint that inflation and the fear that follows it may be ready to peak for now, but that doesn’t mean we go right back to risk on. Other historic safe havens are now working their way up the lists.

This list below was one of the reasons I wanted to highlight Health Care, but this isn’t the first week we have been suggesting a change. Health Services and Medical Equipment have been showing improvement for a couple weeks now and are starting to see more chart reversals and options flow come into the space.

The current downtrend while in the midst of a backtest is not really showing much for signs of a big reversal here.  Very short term there are a few green shoots, but until we see those not get instantly sold into it is better to stay with what is and has been working or wait for a clear sign of a change in character which we don’t have at this point.

We cover all of this and more in the video at the top of the page.  Also look for our Power Sector Review for a closer look under the hood.  you can find these and other charts on our Stocktwits and Twitter feed @Power1nvesting and throughout this site.  As always, this is all for educational purposes only and does not constitute any recommendations, please see our full disclosure and link in the footer.

As always, I hope this helps!