Weekly Macro Review

May 12, 2024

Charts That Matter

Third week up for all three, but volume dropped across the board again. RSI back over 60 for $SPY and $QQQ, but not quite for $IWM. CFG also turned up out of oversold with all seeing the RSI rebound near or above 50 in RSI bull ranges. This is not a bearish setup, even with the low volume. The volume might be cautioning to not get excited about a breakout here just yet. While it can happen anytime, I am still fine with it stretching out a bit longer. At this point we are in the zone for the time pattern, so probably soon. I don’t think it will take until the end of the summer as some are suggesting.

The daily is almost there with $SPY already seeing RSI above 60, $IWM crossed it, but immediately got wobbly and $QQQ is almost there. A big rejection here would be a rejection of the RSI bull range shifts, a big message for the near term, but with the weekly strong, the shifts get the benefit of the doubt.  

The final Triple Play chart, the 65min chart, is in RSI bull ranges across the board with $SPY and $QQQ riding high while $IWM puts in a big RSI Positive Reversal above the MA bands to end the week. I know, there is a divergence too, but divergences are more often detours and right now the other two are pulling higher.

$TLT went straight into the MA bands on the daily as we suggested last week and danced with them the entire week. This is not unusual at all and is better than a hard rejection. It gives them time to turn the MA bands up so they can become a support zone if price does break above the area. 

The breadth progression off the lows continues to build on itself. The New Highs/Lows chart shows the 10 day highs is staying elevated while all the others are growing nicely. This is how you want to see a correction end, just a little more volume, please.

Power Universe

The Power Universe is right back up under the highs as RSI test the RSI bull range break. If we do pullback, I would like to see the RSI find support in the moving Averages denoted with the arrow or the 50 RSI level.

Breadth continues to show some progression across most categories, but the shorter term measures did stall out toward the end of the week. It was still a strong week, so nothing too concerning, some basic profit taking from early buyers of the reversal. Now we need to see the intermediate and longer term buyers appetites be there to pick up those shares quickly. The Summation Index is moving away from the flatline and the signal line, another good sign for the underlying strength here.

Relative Strength Rundown

Global Relative Strength

$ARGT and $EPU have been runaway leaders for a while. Africa is more volatile, but chasing them from behind. Outside of that we are starting to see a lot of Europe on the list now. Maybe it is finally time for them to lead for a bit. I need a little more convincing, but it is interesting at the least. This is across a lot of Europe, but especially the Netherlands when we look at the RS movers and weekly leading gainers.

Intermarket and Size & Style

This third week of the rebound did move the $SPY $DIA $IWM back into the top half of the list, but the $QQQ didn’t get the message. It won’t take much if we can get a fourth week to add to the follow through. Metals remain on top, but $USO recent weakness has it back at the bottom with $TLT. On a better note, I am fine with $UUP RS coming in hard as it has pulled back recently, but caught a timely reversal to eke out a gain this week.

Everyone performed this week, but value ended up staying on top with a mixed sized profile. The gains in Utilities and Consumer Staples certainly helped there. A complete flip over the last month, but it doesn’t mean we aren’t closer to the end than the beginning. Time will tell.

EW Sector RS Rankings

The Power Universe equal weighted sectors didn’t see a lot of RS movement, but did see Utilities and Consumer Staples standout as the leaders this week. The only big loser was Health Care with the largest subsector, Biotechnology, giving back some of the 9% move from last week.

Wrap Up

The week just added to the follow through and helped the indexes we watch push up into resistance zones, but aren’t convincingly through any of them yet.  The volume continued to contract, but that is secondary indicator at best. None of the majors are at new highs yet, so that will be the ultimate resistance top. We may not get through it this week, but things are lining up to get through it in this larger uptrend. Nothing here says we can’t get through, but nothing also tells us when, so we will continue to let it unfold and pay attention everyday.

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!