Weekly Macro Review

March 31, 2024

Charts That Matter

Markets put in another gain for the week to finish strong for the quarter. There was some early jockeying for position into the end of the quarter, but as the week progressed, buyers did too. You can see this easily by flipping though our Weekend Power Snapshots. Below we have the Monthly and Weekly Triple Play charts to give an idea of the strength for the quarter. You can also take a look at the Triple Play Review where I cover 5 time frames on $SPY $QQQ and $IWM. The conclusion is, it’s a bull trend and there is currently no solid evidence that is changing. If anything, March was a month of broadening out and building collective strength.

The next thing we are still watching after equities is bonds. Our $TLT chart is progressing well, but didn’t have the gusto to get above the downtrend line this week. A rejection here would extend this coil and give the bear another shot. On the other hand, a breakout would be a tailwind for small caps and likely the markets as a whole. I know, I know, traditional thinking is stocks go down when bonds go up, but that is more of an old wives’ tail and doesn’t hold up to the longer term data. Lower interest rates would help add fuel to an already strong economy and give some relief to the many industries and especially small to mid cap companies within those industries. This is the battle ground for now and it is likely to have a broad impact once it resolves.

Power Universe

Another week started weak and ended strong. A strong end to a strong quarter. It was a shortened holiday week and the end of the quarter, so volatility was up and could have skewed things a bit, but the pattern seems to be repeating. That bodes well for the markets as a whole. 

The markets continue to grind up in a very tight stair-stepping pattern. Each time though, the RSI make higher lows and is now making higher highs, but not overbought. 9sma of RSI have been hovering around the 60 level and could be pulled on the Nitrous if RSI itself makes a run here. 

The Universe is making headway versus $SPY and $QQQ, but not so much with $IWM. That is okay, means the markets are broad and small caps are currently trying to take the baton and run with it. If interest rates cool, it would help fuel things.

Longer term breadth measures are all continuing to slowly expand from current levels which already are not at bad levels, yet not near extremes. This is the good thing about broad grinding markets, they keep making headway and don’t get overbought quickly.

Nice spikes in new highs at the end of the week back near recent peaks. A strong move above the lines here soon could break this higher and accelerate the ascent. We closed at highs and things are set up nicely if they want to push.

Relative Strength Rundown

Global Relative Strength

The World ETF RS leaders with some new names on the list this week, $AFK $GXG $EWP and EWG. $SPY hung on another week, but was the only US market in the leader’s list. RS Movers with some of the same names; however, the biggest RS gainer was $EWW this week. $ASHR was the big RS loser for the week, continuing to slip back after its recent reversal attempt, but this week was more a week of indecision than it was pure weakness.

Intermarket and Size & Style

The Intermarket ETF RS Rankings list is still dominated by commodities. Equities had a decent close to the quarter as mentioned, but $QQQ was the exception losing ground. Not because the participation was low, but because the heavy weight names finally saw some red. The leaders for the week $DBA and $USO, and the losers $CPRE and $QQQ which are an interesting pair. All of this in the context of no RS movers this week, but a definite pattern of improvement by commodities over the last month. Real Estate and Bonds are both hugging the bottom, but I am noting the $TLT return here to see if it can continue. 

Size and Style finally flipped to Value this week. Growth has been cooling, while still outperforming the last few weeks up until now. How far will it go is the question. I would expect a few weeks at least, if not for the next few months. This would be a great rotation to allow money to move through the market without leaving while growth catches its breath. This doesn’t mean we won’t see pullbacks in the major Indexes since they are so top heavy right now, but it does mean there will be a new set of fishing lanes to pay attention to for now. 

EW Sector RS Rankings

The EW Sectors didn’t see much for RS movement this week. Most sectors stayed in their lanes, but Utilities jumps out as a potential change in character worth watching. Information Technology and Communication Services were the only two sectors that were down on the week. Health Care squeaked by with a small gain, but the rest put in solid weeks. 

Wrap Up

After putting up a fight and taking a stand last week, this week the markets started wobbly and finished strong and broad pulling things back into the green for the week and ending the quarter with buyers in control. This took place even as Technology and many of those leaders started to see some long overdue selling. It doesn’t mean they will go long or far, but ebb and flow is always better than a straight line when it comes to markets. We start a new quarter tomorrow in a good spot, no need to freak out on the first weak day, just pay attention and the markets will give you plenty of messages along the way.

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!