Edition 0007. 03.12.2022.
This weekly commentary examines the 10 largest companies, by market capitalization, affectionately called The Generals, in the S&P 500. We analyze performance, price, trend, momentum, and breadth. By having an in-depth understanding of what The Generals are doing, it should help us to understand what is next for the S&P 500 as a whole.
We start with performance tables that allow us to track how the symbols have performed over several rolling periods of time. We can see New high/low details, as well as determine trend and momentum using quantitative measures. Here are a few notes to help you interpret the tables.
They are grouped first by family, and then sorted by performance.
Quantitatively, the general trend is determined by price in relation to its 40-week simple moving average. 1 means the trend is up. 2 means the trend is vulnerable. 3 means the trend is down.
1 = close is above the ma and the ma is up.
2 = close is below the ma and the ma is up, close is above a flat or ma that is down.
3 = close is below the ma and the ma is down.
Quantitatively, the general momentum condition is determined by a 12,26,09 Price Percentage Oscillator – think MACD. 1 means the momentum condition is positive. 2 means the momentum condition is positive but decelerating. 3 means the momentum condition is negative but decelerating. 4 means the momentum condition is negative.
1 = the oscillator is above 0 and the histogram is above 0.
2 = the oscillator is above 0 but the histogram is below 0
3 = the oscillator is below 0 but the histogram is above 0.
4 = the oscillator is below 0 and the histogram is below 0.
The ranking of closing highs and lows is as follows:
1 = 4-week closing high or low.
2 = 13-week closing high or low.
3 = 52-week closing high or low.
4 = all-time closing high or low.
The 40-week SMA of relative strength to SPY is as follows:
1 = 40-week SMA is up.
2 = 40-week SMA is same.
3 = 40-week SMA is down.
The General's Market Capitalizations
The Generals remain unchanged in name. Meta Platforms has dropped from 9th largest company in the S&P 500 to 10th as Unitedhealth grew from 10th to 9th.
Overview.
Performance table sorted by the 1-week rate-of-change.
Last week The Generals lost 2.91% in value. Only 1 of the 10 symbols finished higher. BRK.B led and FB lagged. BRK.B printed an all-time closing high. FB printed a 52-week closing low. BRK.B remains the only symbol in an uptrend and with positive momentum on our quantitative model.
Relative performance chart. This shows the year-to-date performance in a more visual way.
The year-to-date picture remains largely unchanged. BRK.B is positive while none of other Generals are. AAPL dropped from 3rd to 6th.
The Generals geometric average and relative strength.
The middle panel is a geometric average of the top 16 companies by weight in the S&P 500. This is to avoid having to recalculate the average every time the bottom spots switch. The geometric average is a form of weighting that minimizes the impact of the highest priced stocks on the average itself. The bottom panel is The General’s Geometric Average divided by SPY. The top panel is its momentum using a 12,26,09 Percentage Price Oscillator.
The Generals have been down trending since their December peak. Price remains below its still upward sloping 40-week simple moving average. Relative strength peaked a month later, and has been dropping since. RS has broken below its November 2021 lows.
The Generals geometric average and advance-decline data.
The top panel is the geometric average of the top 16 companies by weight. The middle panel is the cumulative advance decline line which, in this case, is measuring weekly advancers minus decliners to get the net advancers. The net advancers are then summed to form the cumulative advance-decline line. The bottom panel, called the advance-decline percentage, shows the percent of net advancers as histogram bars. The line is a 10-week simple moving average of the net advancers histogram. We can use this to show breadth thrusts, and we can also judge the strength of the underlying 16 stocks.
The cumulative advance-decline line peaked at the same time as price. Now it is moving down to its upward sloping 40-week simple moving average. The advance-decline percentage peaked then, too. Last week we saw 12.5% of the Generals advance, so 2 of 16, and the moving average of AD% has broken below 40 and so is now is negative territory.
The Generals geometric average with percentage above moving average data.
This next chart shows The Generals Geometric average with its 10-week simple moving average in blue and its 40-week simple moving average in red. The middle panel shows the percentage of stocks above their 10-week moving averages. The bottom panel shows the percentage of stocks above their 40-week simple moving averages. The shading turns red when the percentage drops to 50% or less.
25%, or 4 of 16, Generals closed above their 10-week simple moving averages. That is the same number as two weeks ago. 31.25%, or 5 of 16, Generals closed above their 40-week simple moving averages. That is a decline from 6 two weeks ago.
The Charts
Note: Goog and Googl are very similar, and until there is a change, the analysis of Goog represents both charts.
Apple
Apple remains in an uptrend as price is just above its upward sloping 40-week simple moving average. Momentum has broken below its upward sloping trendline which is ominous. Relative strength is testing its December 2021 breakout level from above. AAPL remains in an uptrend.
MSFT
Microsoft has closed below its upward sloping 40-week simple moving average and its upward sloping trendline from the Covid 2020 low. Momentum continues has accelerated to the downside. Relative strength remains in a coil pattern, though is now below its upward sloping 40-week simple moving average. MSFT is rangebound.
Alphabet
Goog remains below its upward sloping 40-week simple moving average. Momentum is below its 0-line. Relative strength has been improving and is now just above its still upward sloping 40-week simple moving average. GOOG is rangebound.
Amazon
Amazon closed for the 11th week in a row below its downward sloping 40-week simple moving average. Momentum is decelerating, though negative, as price as buyers continue to step in around 2,870. Relative strength remains trending downward below its downward sloping 40-week simple moving average. AMZN is rangebound.
Tesla
Price remains below its still upward sloping 40-week simple moving average and back into the $540-$900 range. Momentum has just crossed below its 0-line. Relative strength is testing its upward sloping 40-week simple moving average from above. TSLA is rangebound.
Meta Platforms
Meta Platforms is sitting continues to break down. The selling continues. Price is 41% below its 40-week simple moving average and 50% from its September 2021 high. Momentum is negative but flattening, and relative strength is awful as well. I am watching for a mean reversion setup. FB remains in a downtrend.
Nvidia
Nvidia continues to trade in its falling channel with price closing below its still upward sloping 40-week simple moving average. Momentum is steady as the momentum oscillator line tests its 0-line from above. Relative strength is back to its upward sloping 40-week simple moving average. NVDA is rangebound.
Berkshire Hathaway
The famed Berkshire Hathaway is our only General to finish the week with a gain! It is also in a confirmed uptrend with a positive momentum condition according to our quantitative measures. Additionally, it is also the only general showing a YTD gain. Price continues upward above the $295 breakout level. Price is above its upward sloping 40-week simple moving average. Momentum is positive. Relative strength is very strong. BRK.B is in an uptrend.
UnitedHealth Group
Just 10 weeks from its last all-time closing high, price remains above an upward sloping 40-week simple moving average. Momentum remains positive but below its average line. Relative strength looks great above its upward sloping 40-week simple moving average and upward sloping trendline. UNH remains in an uptrend.
Conclusion
The generals as a whole are losing strength against the S&P 500. 7 of them are making new 4, 13, and 52-week closing lows, while only one is making a new all-time closing high. Only 1 general is positive this year-to-date, though 4 of them are down less than SPY. That said, as breadth continues to breakdown, the majority of them remain rangebound and are very vulnerable.
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