Edition 0008. 03.19.2022. Week of 03.14 - 03.20.2022
This weekly commentary examines the 10 largest companies, by market capitalization, affectionately called The Generals, in the S&P 500. We analyze size, price, trend, momentum, and breadth. By having an in-depth understanding of what The Generals are doing will help us understand what the S&P 500 is doing.
The General's Market Capitalization & Trend Table.
Click here for a guide to the subjective trend. Click the performance table to enlarge.
The Generals remain unchanged in name. Meta Platforms has moved back to being the 9th largest company in the S&P 500 as Unitedhealth dropped from 9th to 10th.
Overview.
Performance table sorted by the 1-week rate-of-change.
Click here for the performance table guide. Click the performance table to enlarge.
Last week the Generals gained 9.23% in value. They outperformed SPY which gained 5.82% in value. The leader was NVDA and the FB next. The weakest Generals were GOOGL and UNH. Both Berkshire Hathaway and Unitedhealth notched new all-time closing highs.
Year-to-date performance chart. Click to enlarge.
YTD BRK.B remains positive, and now UNH has joined the positive party. AMZN has risen to 3rd position. FB is still the laggard.
The Generals geometric average and relative strength. Click to enlarge.
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 10 period Relative Strength Index.
The Generals have been down trending since their December peak. Price has remounted its still upward sloping 40-week simple moving average and is now above its January low. Relative strength has been bounced and is not above its November 2021 low.
The Generals geometric average and advance-decline data. Click to enlarge.
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 AD line has bounced from its upward sloping 40-week simple moving average and is above its December 2021 and February 2022 lows. 15 of 16 Generals closed the week higher moving the 10 period simple moving average back into the neutral territory between 40% and 60%.
The Generals geometric average with percentage above moving average data. Click to enlarge.
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.
68.75% or 11 of the 16 Generals are now above their 10-week simple moving averages. This is up from 25%, or 4 of 16, two weeks ago. 50% or 8 of the 16 Generals closed above their 40-week simple moving averages. This is up from 31.25%, or 5 of 16 Generals 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. Click to enlarge.
Price undercut its rising 40-week simple moving average and closed near the highs of the week forming a bullish engulfing. Momentum has undercut its trendline as well. Relative strength remains above its December 2021 breakout level. Apple is rangebound.
MSFT. Click to enlarge.
Price remains above the $280 level which marks its October 2021 low, but remains below its rising 40-week simple moving average in a descending wedge pattern. Momentum is negative though decelerating. Relative strength remains coiling around its rising 40-week simple moving average. MSFT is rangebound.
Alphabet. Click to enlarge.
Goog remains below its upward sloping 40-week simple moving average. Momentum is below its 0-line though decelerating. Relative strength remains above its still upward sloping 40-week simple moving average. Goog is rangebound.
Amazon. Click to enlarge.
Amazon closed for the 12th week in a row below its downward sloping 40-week simple moving average. Momentum is decelerating, though negative, as price as the $2,870 level continue to be a level defended strongly by bulls. Relative strength remains trending upwards below its downward sloping 40-week simple moving average. AMZN is rangebound.
Tesla. Click to enlarge.
Price has remounted its still upward sloping 40-week simple moving average and has formed a bullish engulfing pattern. Price has closed back above the $900 level. Momentum is making a stand at its 0-line. Relative strength found support at its upward sloping 40-week simple moving average and has now broken its downward sloping trendline from below. TSLA is rangebound.
Meta Platforms. Click to enlarge.
FB has fallen 50% over the previous 28 weeks. Last week FB had a 15% rebound and price has formed what looks to be a bullish engulfing tweezer bottom. Price has closed back above $207 which served as resistance in July 2019 and then as support in July 2020. Momentum is very negative and relative strength remains near multi-year lows. FB remains in a downtrend.
Nvidia. Click to enlarge.
Nvidia has closed above its falling channel and gained back about 8 weeks worth of value. Price remains above its still upward sloping 40-week simple moving average. Momentum has made a stand at its 0-line though it is below its average and its downward sloping trendline. Relative strength is above its upward sloping 40-week simple moving average. Despite its protracted pullback and the fact that price’s last higher low has undercut the $230.50 level, I would argue NVDA remains in an uptrend.
Berkshire Hathaway. Click to enlarge.
The famed Berkshire Hathaway is our only General in a quantitative uptrend with a positive momentum condition. Subjectively, it is obviously in an uptrend as well. Price has made an all-time closing high. Momentum is positive and confirming the high. Relative strength remains above its breakout level and above its upward sloping 40-week simple moving average.
UnitedHealth Group. Click to enlarge.
UNH’s close marked an all-time weekly closing high. A break above $509.50 and the momentum oscillator line closing above its average line will signal the next leg higher. For now, despite positive momentum and strong relative strength, price remains rangebound.
Conclusion
The Generals as whole had a terrific week and out performed SPY. The majority of the charts are rangebound, with two generals advancing to all-time weekly closing highs and in positive territory this year-to-date.
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