Weekly Macro Review

April 7, 2024

Charts That Matter

All three posted down weeks as the markets couldn’t muster a win to start the new quarter. It wasn’t a terrible week except for Thursday, but you can’t really say “except for” in this case. Often, days like that are very driven by a big headline with actionable information, or so it seems. This time, it was a bunch of small events around the market that culminated in multiple spaces seeing selling at the same time, but allegedly for different reasons, culminating in add on selling and a quick panic. The one foot out the door market continues.  There are many different ways to look at it, but a shot across the bow at the least. Pullbacks and corrections are part of the game and this setup could definitely produce one that many have been waiting for. The weekly bearish engulfing patterns have every potential to follow through and humble these markets a bit before moving higher. $SPY RSI getting rejected at 80 gives it an excuse and plenty of momentum to work off. The weeklies really need to see downside follow through on this weekly reversal attempt. At the same time, on the daily charts, we can point to RSI pullbacks in a bull range into RSI Positive Reversals once again coming off the bearish divergences that haven’t been following through. These RSI Positive Reversals pushing us back higher would be pretty normal in a strong move. As long as it holds the RSI bull ranges like they are now, the trend remains intact.

We have been following $TLT for weeks now and this week it broke the bottom of our patterns and closed on the 50% retracement of the move off the October lows. On the negative’s list, as mentioned in the daily, it broke below a couple of potential horizontal supports this week, bounced back into those lines and got rejected there. However, it did hold on the 50% retracement to close the week. Next week should be a big tell on rates. CPI comes out and could cause some more volatility in all the interest rate sensitive spaces.  

Power Universe

This whole week was volatile as the buyers and sellers traded days for the first time in a while where the sellers had more going for them. Thursday was a big part of that and didn’t get all that much follow through, so there is that. Friday’s bounce back didn’t feel that strong, but may have held some clues.

This week the markets gave back some overall, but it really wasn’t that bad from a a broad perspective. There were definitely winners and losers we will look at in the Power Sector Review. RSI remains in a strong bull range and Friday’s bounce produced a fresh RSI PosRev which can be nice reversal point that go with the larger trend.

This overall stall versus the top two and some pick up of relative strength versus the $IWM shows larger cap names held up better this week.

Breadth gave some ground this week after a few rare strength readings last week. This isn’t abnormal. It does put a little short term caution in if it keeps leaking early this week. McClellan Summation Index fired a sell in another whipsaw like we have seen a couple times in 2024. This takes place as the AdvDecl Line just pulls back to the breakout point. Not an overly bearish stance to start the week with.

New lows are starting to pick up as well, adding to the caution a new pullback could start at anytime. I agree, but also feel the broader markets did a lot of that in March. Maybe they need more rest, or maybe they grind it out by rotating into a fresh group of sectors and subsectors.

Relative Strength Rundown

Global Relative Strength

The World ETF RS leaders had some new additions in $TUR $EPOL $EWW $EWT bumping off $EWG $EWY with modest losses and $VNM $EIS with more violent weeks. $SPY still hanging in there near the bottom of the leaders list. RS Movers with a diverse group and many of the names that jumped on and off the leaders list this week. $TUR and $EPOL were the two that notably made all three lists.

Intermarket and Size & Style

Commodities are still the big story here on the Intermarket ETF RS list, but we now have $IWM and $DIA below the midline putting equities on a yellow flag until they can climb back into the top half of the list.

Last week we saw the shift to value while the markets continued to rise. This week all of the list is negative, but Mega and Large cap growth moved their way back up the lists with larger names performing better in the more intense selling week. Not what many would expect, but what we have grown a little accustomed to in this environment.

EW Sector RS Rankings

A little more movement in the EW Sector RS rankings with Technology making a jump back higher in RS while still negative on the week. Health Care and Consumer Discretionary were the worst performers. The first losing RS more due to old data falling off and the latter to worse current performance. Consumer Staples also pulled back strong this week to back test the recent breakout. It didn’t act very defensive in this week’s selling, neither did Real Estate. It seemed to be more interest rate sensitive and the FED cutting rates than it was about specific offensive versus defensive characteristics. The big gainers continued to be Energy and Materials, specifically the commodity based parts. 

Wrap Up

Markets seem to be at another short term decision point, maybe an intermediate one. There are plenty of things that point to a possible pullback, and that would be perfectly normal and actually probably help this rally in the long run even if lasted into the summer. But that doesn’t mean that is what we will see. There are also good arguments that certain sectors have been resting for a month or more now and could take the lead through rotation and keep this grind going. Either is fine, just pay attention and the markets will tell us which path it wants to take; and I think it will tell us this week.

You can find many of these and other charts throughout the power-investing.com site and through our Stocktwits and Twitter feeds @gtlackey and @power1nvesting.com. Anything mentioned is for education purposes only and 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!