Weekly Macro Review

May 20, 2024

Charts That Matter

This week I am shaking up the reports a little as we get ready to roll out our memberships. We will have a few options and our free level will include this report to give a concise macro view through the lens of relative strength.

Each week we will highlight at least one of the Triple Play charts, this week being the daily view. $SPY and $QQQ breaking out and holding on higher volume as they move into RSI bull ranges. Now, they are closing the week on Nitrous with solid momentum and not nearing overbought yet. 

$TLT came right up to the daily down trend line and got rejected into the end of the week, but on lower volume for this space. The weekly is still coming off the RSI bull range test with RSI moving above the moving averages. Daily RSI turned down at 60 on the trendline rejection, but is still above the now rising MA bands. A break above the downtrend line and the previous breakdown level would be a big accomplishment. Back to the weekly, it has its own downtrend line to deal with if we clear the daily levels discussed.

While the new highs are at pretty strong levels compared to the last year, but not overly strong with big spike days yet, they are remaining consistently thick as they climb through the levels.

Power Universe

The Power Universe broke out on Tuesday, extended on Wednesday and came back for the test on Thursday and Friday. The coming week will get to decide. Any overshoot would target the orange 9sma and the upper MA Band just below. The RSI is in a fresh bull range on Nitrous while the CFG has a bearish divergence at the 100 level. Any signal from that is likely a short term one and could be part of that back test overshoot idea.

Breadth has new NHNL Differential on a buy signal with the indicator and the two moving averages in alignment. The AdvDec Line is in new high territory. The MA breadth has improved, but has lagged other indicators on this bounce. That isn’t a terrible thing as it gives room to rise before getting too overheated. The McClellan Summation is moving strong away from the flatline after the buy signal.

Relative Strength Rundown

Global Relative Strength

International markets remained strong this week complementing the breakouts here in the US, but in reality many of these have already been making new highs while the domestic markets took a rest. There really wasn’t much RS movement in the leaders as there were no RS Movers on the list this week. Most of the shifts here started back in March and April.

There is a strong group of weekly performers as well, many of which are already ranked high, but there are some moving up in RS like $EWA which looks to be emerging from a congestion area and is now in an RSI bull range on multiple time frames. $INDA doesn’t have the RS, but put in a strong week with a breakout of a running base developed while negotiating the larger breakout from the 2021 highs. Its RSIs look like they have plenty of room to expand before this gets extended. The US markets haven’t been on these top lists very much during their corrections, but that shouldn’t surprise us. What we want to see is them move back onto these lists as the breakout matures. 

Intermarket and Size & Style

Equities have all moved back to the top half of the list putting them back in favor from an Intermarket Analysis view. Commodities don’t have to give up the top spot for us to perform ok, but the equity ETFs need to keep climbing for us to be hitting on all cylinders in the markets. $QQQ jumped this week as large caps took the baton away from the little guys and is trying to get back out front. $TLT was another notable RS gainer this week as it’s reversal took hold and moved up into the first resistance zone. If $TLT keeps moving higher, I believe it would be a tailwind for equities in the near term while visions of rate cuts danced through investors heads like sugar plums at Christmas.

This week things shifted back to being more about size than style with large and mega caps waking up and realizing there was a breakout afoot. I guess growth buyers just wanted to wait and get the breakouts before getting involved, but as soon as they were convinced the breakout might stick, growth rose back to the top.

EW Sector RS Rankings

The top two spots hold another week with Utilities on top, but was toward the bottom of the list as far as weekly performers. The leaders were Information Technology followed by Communication Services which we covered a couple of weeks ago when it was in the gutter. You can watch that video review here. It took a week or so to get in gear, but the underpinnings were already there. Technology remerging as a performance leader after a trip to the bottom of the list would not surprise us at all. Industrials are on the other end of the RS curve losing more ground and falling into the bottom half of the list after a long stent up top. This could just be temporary, but it’s not a great sign when you are the bottom performer on a breakout week. We will keep a close eye on this one. I would expect it to do better in the political season due to it’s defense segment as well as infrastructure plays, but it may not this time.

Wrap Up

This week went a long way to help the bulls, or buyers if you prefer, move back out front for another leg higher. The breakouts happened in the face of a lot of doubting over the last couple of weeks. Volume staying low had many looking in the wrong direction. We remained somewhat tempered ourselves due to the volume, but pushed forward daily letting our readers know the breadth and participation was improving nicely, even without the volume showing. These days volume is a secondary indicator at best, probably should move it to third or fourth tier at this point with all the options and dark pool volume sloshing around. As Brian Shannon says, “Only Price Pays” so let’s keep it on top, but continue to analyze these other areas to figure out where we feel that price is most likely to pay us the most in the coming months. Price is trying to tell us the correction is over and now we need to harvest the energy that consolidation created for the next leg higher in the major trend.

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!

Weekly Macro Review

May 20, 2024

Charts That Matter

This week I am shaking up the reports a little as we get ready to roll out our memberships. We will have a few options and our free level will include this report to give a concise macro view through the lens of relative strength.

Each week we will highlight at least one of the Triple Play charts, this week being the daily view. $SPY and $QQQ breaking out and holding on higher volume as they move into RSI bull ranges. Now, they are closing the week on Nitrous with solid momentum and not nearing overbought yet. 

$TLT came right up to the daily down trend line and got rejected into the end of the week, but on lower volume for this space. The weekly is still coming off the RSI bull range test with RSI moving above the moving averages. Daily RSI turned down at 60 on the trendline rejection, but is still above the now rising MA bands. A break above the downtrend line and the previous breakdown level would be a big accomplishment. Back to the weekly, it has its own downtrend line to deal with if we clear the daily levels discussed.

While the new highs are at pretty strong levels compared to the last year, but not overly strong with big spike days yet, they are remaining consistently thick as they climb through the levels.

Power Universe

The Power Universe broke out on Tuesday, extended on Wednesday and came back for the test on Thursday and Friday. The coming week will get to decide. Any overshoot would target the orange 9sma and the upper MA Band just below. The RSI is in a fresh bull range on Nitrous while the CFG has a bearish divergence at the 100 level. Any signal from that is likely a short term one and could be part of that back test overshoot idea.

Breadth has new NHNL Differential on a buy signal with the indicator and the two moving averages in alignment. The AdvDec Line is in new high territory. The MA breadth has improved, but has lagged other indicators on this bounce. That isn’t a terrible thing as it gives room to rise before getting too overheated. The McClellan Summation is moving strong away from the flatline after the buy signal.

Relative Strength Rundown

Global Relative Strength

International markets remained strong this week complementing the breakouts here in the US, but in reality many of these have already been making new highs while the domestic markets took a rest. There really wasn’t much RS movement in the leaders as there were no RS Movers on the list this week. Most of the shifts here started back in March and April.

There is a strong group of weekly performers as well, many of which are already ranked high, but there are some moving up in RS like $EWA which looks to be emerging from a congestion area and is now in an RSI bull range on multiple time frames. $INDA doesn’t have the RS, but put in a strong week with a breakout of a running base developed while negotiating the larger breakout from the 2021 highs. Its RSIs look like they have plenty of room to expand before this gets extended. The US markets haven’t been on these top lists very much during their corrections, but that shouldn’t surprise us. What we want to see is them move back onto these lists as the breakout matures. 

Intermarket and Size & Style

Equities have all moved back to the top half of the list putting them back in favor from an Intermarket Analysis view. Commodities don’t have to give up the top spot for us to perform ok, but the equity ETFs need to keep climbing for us to be hitting on all cylinders in the markets. $QQQ jumped this week as large caps took the baton away from the little guys and is trying to get back out front. $TLT was another notable RS gainer this week as it’s reversal took hold and moved up into the first resistance zone. If $TLT keeps moving higher, I believe it would be a tailwind for equities in the near term while visions of rate cuts danced through investors heads like sugar plums at Christmas.

This week things shifted back to being more about size than style with large and mega caps waking up and realizing there was a breakout afoot. I guess growth buyers just wanted to wait and get the breakouts before getting involved, but as soon as they were convinced the breakout might stick, growth rose back to the top.

EW Sector RS Rankings

The top two spots hold another week with Utilities on top, but was toward the bottom of the list as far as weekly performers. The leaders were Information Technology followed by Communication Services which we covered a couple of weeks ago when it was in the gutter. You can watch that video review here. It took a week or so to get in gear, but the underpinnings were already there. Technology remerging as a performance leader after a trip to the bottom of the list would not surprise us at all. Industrials are on the other end of the RS curve losing more ground and falling into the bottom half of the list after a long stent up top. This could just be temporary, but it’s not a great sign when you are the bottom performer on a breakout week. We will keep a close eye on this one. I would expect it to do better in the political season due to it’s defense segment as well as infrastructure plays, but it may not this time.

Wrap Up

This week went a long way to help the bulls, or buyers if you prefer, move back out front for another leg higher. The breakouts happened in the face of a lot of doubting over the last couple of weeks. Volume staying low had many looking in the wrong direction. We remained somewhat tempered ourselves due to the volume, but pushed forward daily letting our readers know the breadth and participation was improving nicely, even without the volume showing. These days volume is a secondary indicator at best, probably should move it to third or fourth tier at this point with all the options and dark pool volume sloshing around. As Brian Shannon says, “Only Price Pays” so let’s keep it on top, but continue to analyze these other areas to figure out where we feel that price is most likely to pay us the most in the coming months. Price is trying to tell us the correction is over and now we need to harvest the energy that consolidation created for the next leg higher in the major trend.

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!