Edition 0011. 04.17.2022. Week of 04.11 - 04.17.2022
This weekly commentary examines the 10 largest companies in the S&P 500, by market capitalization, affectionately called The Generals. We analyze size, price, trend, momentum, and breadth. Having an in-depth understanding of what The Generals are doing leads to an information regarding what the army itself is doing, SPY.
Key Takeaways
Only Berkshire Hathaway and Unitedhealth Group are positive this year-to-date.
Last week The Generals shrank from 29.47% of SPY’s market cap to 28.71%.
Berkshire Hathaway overtook Nvidia for the 7th largest weight, and Unitedhealth Group overtook Meta Platforms for the 9th largest weight.
2 of The Generals, Amazon.com and Unitedhealth Group, outperformed SPY though neither one recorded a gain last week.
There were more new lows than new highs.
The group is 19.5 weeks from their last 52-week closing high, on average.
8 of our generals have a smoothed moving average of relative strength, to SPY, that is still sloping upwards.
6 of our Generals, 18.61% of market cap, are currently range bound. These resolutions should drive the next move of SPY. These are Apple, Alphabet, Amazon, Tesla, and Nvidia.
The General's Market Capitalization & Trend Table
Click here for a guide to the subjective trend. Click the performance table to enlarge.
Source of the weights data: https://www.barchart.com/etfs-funds/quotes/SPY/constituents
Last week, The Generals shrank from 29.47% of SPY’s market cap to 28.71%. Berkshire Hathaway overtook Nvidia for the 7th largest weight, and Unitedhealth Group overtook Meta Platforms for the 9th largest weight. 2 of The Generals, Amazon.com and Unitedhealth Group, outperformed SPY though neither one recorded a gain last week. There were more new lows than new highs. The group is 19.5 weeks from their last 52-week closing high, on average. 8 of our generals have a smoothed moving average of relative strength, to SPY, that is still sloping upwards. 6 of our Generals, 18.61% of market cap, are currently range bound. These resolutions should drive the next move of SPY. These are Apple, Alphabet, Amazon, Tesla, and Nvidia.
Overview
Performance table sorted by the 1-week rate-of-change.
Click here for the performance table guide. Click the performance table to enlarge.
Year-to-date performance chart.
Click to enlarge.
Only Berkshire Hathaway and Unitedhealth Group are positive this year-to-date. NVDA and FB continue to lag.
The Generals geometric average and relative strength.
Click to enlarge.
Middle Panel: a geometric average of the top 16 companies, by cap-weight, in the S&P 500. The geometric average is a form of weighting that minimizes the impact of the highest priced stocks on the average itself.
Bottom Panel: the relative strength chart. The General’s Geometric Average divided by SPY. Top Panel: momentum using Wilder's 10 period Relative Strength Index (RSI).
The Generals geometric average is breaking down below its support and still upward sloping 40-week simple moving average. The March low is a logical to place to watch.
The relative strength line against SPY is running down to a level that might act as support. A break below the March low would confirm a double top in relative strength.
The RSI topped ahead of the average in November 2021. Since that top, the RSI has fallen and stayed below 60. This damming evidence, the RSI shifting to its downtrend range, speaks to the probabilities of the Generals Average itself now beginning to downtrend.
The Generals geometric average and advance-decline data.
Click to enlarge.
Top panel: same geometric average from above.
Middle panel: the cumulative advance decline line which sums weekly net advancers, advancers minus decliners.
Bottom panel: the advance-decline percentage shows the percent of net advancers as histogram bars with a 10-week simple moving average of the net advancers histogram. This shows breadth thrusts and the strength of the underlying stocks.
The cumulative AD peaked at the same time as the Generals Index itself. Since then it has broken below previous support. The AD line is now headed down to test its March 2022 low. This is an important level to watch.
Our net advancers reading is 6.25%, meaning 1 of 16 Generals advanced last week. The 10-week simple moving average of The Generals advance-decline percentage is now below 40%, aka in the danger zone.
The Generals geometric average with percentage above moving average data. Click to enlarge.
Top panel: The Generals Geometric average with its 10-week (blue) and 40-week (red) simple moving averages.
Middle panel: percentage of generals above their 10-week simple moving averages.
Bottom panel: percentage of generals above their 40-week simple moving averages.
Last week, the number of generals above their 10-week simple moving averages fell from 56.25%, 9 of 16, to 37.50%, 6 of 16. The number of generals above the 40-week simple moving averages stayed the same at 43.75%, 7 of 16.
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.
AAPL lost 2.28% in value last week. Price closed at the bottom of its candle range and continued down towards its upward sloping 40-week simple moving average. Momentum is decelerating though remains positive. Relative strength remains above its support level. Apple is rangebound.
MSFT. Click to enlarge.
MSFT lost 5.77% in value last week after gaping down. Price closed at a 13-week closing low and is looking to test the bottom of its falling wedge. Momentum is negative. Relative strength has broken its coil to the downside. MSFT remains consolidating in an uptrend, though it’s close to voiding the bull case of trend continuation.
Alphabet. Click to enlarge.
Goog lost 5.04% in value last week. Price remains below its upward sloping 40-week simple moving average. Momentum is negative, and relative strength has broken down from its coil. Goog is rangebound, though the bull case is invalidated with a closed below $2,494.
Amazon. Click to enlarge.
Amazon lost 1.78% in value last week and printed a 4-week closing low. Price remains between the $3,550 and $2,870 levels which define its year-and-a-half long trading range. Momentum is negative. Relative strength has broken below its almost 3-month upward sloping trendline. AMZN is rangebound.
Tesla. Click to enlarge.
TSLA lost 3.95% in value last week. Price remains above the $900 level and below the $1,243.50 level above its upward sloping 40-week simple moving average. Momentum has made a lower-high though is still positive. Relative strength remains positive, though has lagged over the last two-weeks. TSLA is rangebound.
Meta Platforms. Click to enlarge.
FB lost 5.46% in value last week. Price remains above $207, which was support in June 2020. This is a key level. Momentum has flattened out but remains very negative. Relative strength remains near all-time lows. FB remains in a downtrend.
Nvidia. Click to enlarge.
NVDA lost 8.05% in value last week. Price looks to have a failed breakout from its falling channel and has recorded a 13-week closing low. Momentum is turning negative. Relative strength is at a key level and on the verge of break down. NVDA is rangebound.
Berkshire Hathaway. Click to enlarge.
The famed Berkshire Hathaway lost 2.48% in value last week. Price is stretched above its upward sloping 40-week moving average which speaks to the probabilities of more mean reversion. Momentum and relative strength remain trending upwards. Price is in an uptrend.
UnitedHealth Group. Click to enlarge.
UNH lost 2.04% in value last week. Price remains above its 261.8% Fibonacci extension from its pre-Covid peak to its Covid lows. Momentum and relative strength remain above their upward sloping trendlines. Price is in an uptrend.
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