Edition 0012. 04.25.2022. Week of 04.18 - 04.24.2022
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
Berkshire Hathaway, Unitedhealth Group, and Johnson & Johnson are positive this year-to-date.
The Generals continued to shirk as a percentage of SPY's market capitalization. They have gone from 29.47% to 28.71% and now to 27.97% over the last three weeks.
JNJ has become the 10th largest company and FB fell out of the top 10.
Berkshire Hathaway overtook Nvidia for the 7th largest company while NVDA fell to 8th largest.
6 of The Generals outperformed SPY, though not all finished with a gain. Those were TSLA, JNJ, MSFT, AAPL, BRK.B, and UNH.
There were more new lows than new highs.
9 of our generals have a smoothed moving average of relative strength, to SPY, that is sloping upwards.
4 of 9 Generals are quantitatively in intermediate term uptrends with positive momentum conditions.
The group is down 17.75%, on average, from its last 52-week high.
From a quantitative perspective, up trending market cap just outweighs down trending.
From a subjective perspective, more market cap is trending downwards than upwards. There is also a significant amount of market cap that is rangebound. Resolutions from AAPL, AMZN, TSLA, and NVDA will be very important to watch for clues pointing SPY's next move.
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, FB was pushed out of the top 10 largest companies. JNJ has taken its place.
2 of our 10 Generals, JNJ and TSLA, closed the week in positive with gains in value.
We see more new lows than new highs, in fact 7 Generals printed a 4 or 13-week closing low while there were 0 new highs.
Thanks to JNJ, BRK.B, and UNH, The Generals have improved from 19.5 to only 17.75 weeks from their last 52-week closing high, on average.
The group is down 17.75%, on average, from its last 52-week high.
9 of our generals have a smoothed moving average of relative strength, to SPY, that is sloping upwards.
4 of 9 Generals are quantitatively in intermediate term uptrends with positive momentum conditions.
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.
From a year-to-date perspective, BRK.B has the largest gains with 12.23%, though it has been declining for the last 4 weeks. JNJ has earned its place on this chart. It is now in 2nd position with a 6.12% gain. UNH has gained 3.74% in value after dropping for the last 2 weeks. The rest of the Generals show losses. Those losses are led by NVDA, down almost 33.75% YTD.
The Generals geometric average and relative strength.
Click to enlarge.
Top Panel: momentum using Wilder's 10 period Relative Strength Index (RSI).
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.
The Generals geometric average has broken down below its support and still upward sloping 40-week simple moving average. The March low is a logical to place to watch now.
The relative strength line, against SPY, has closed below its still rising 40-week simple moving average. A close lower will confirm a double top in relative strength.
Since the top in RSI from November 2021, 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. We are watching for RSI to close below 30.
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 line has broken below its March 2022 low and its still upward sloping 40-week simple moving average. We have the October 2021 low to watch now.
Our net advancers reading is 25% meaning 4 of 16 Generals advanced last week. The 10-week simple moving average of The Generals advance-decline percentage has recovered from the danger zone and is back in neutral territory between 60% and 40%.
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.
The number of generals above their 10-week simple moving averages has fallen from 37.50%, 6 of 16, to 31.25%, 5 of 16. The number of generals above the 40-week simple moving averages been the same for the last 3 weeks and reads 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 2.12% in value last week. Price closed at the bottom of its candle range and printed a 4-week closing low. Price remains above its upward sloping 40-week simple moving average. We are looking at the $154 level for support, if not $159 first. Momentum remains positive but weakening. Relative strength remains flat and holding above its support level. Apple is rangebound.
MSFT. Click to enlarge.
MSFT lost 2.07% in value last week and printed a 13-week closing low. Price is testing the bottom of its falling wedge below Its downward sloping 40-week simple moving average. A break below the wedge points to the $265 - $267 zone which is the 38.2% Fibonacci retracement of the March 2020 Covid-low to the November 2021 peak. Momentum is negative. Relative strength has broken its coil to the downside. MSFT is in an intermediate term downtrend.
Alphabet. Click to enlarge.
Goog lost 5.60% in value last week. Price remains below its upward sloping 40-week simple moving average, printed a 13-week closing low, and has now created a lower-low. We are looking to roughly $2,250 as potential support, since that is the 38.2% Fibonacci retracement level from the 2020 Covid-low to the November 2021 high. Momentum is negative, and relative strength has broken down from its coil. Goog is in an intermediate term downtrend.
Amazon. Click to enlarge.
Amazon lost 4.85% 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’s intermediate-term trend is rangebound above $2,870.
Tesla. Click to enlarge.
TSLA gained 2.04% in value last week on earnings. Price remains above Its upward sloping 40-week simple moving average. Momentum is flat, positive, and weak. Relative strength remains positive and is trying to make a higher-high above its breakout level. TSLA’s intermediate term trend is rangebound.
Meta Platforms. Click to enlarge.
While no longer one of the top 10 largest companies, I am still including the charts.
Nvidia. Click to enlarge.
NVDA lost 8.20% in value last week. Price has printed a 13-week closing low and continues to break down. This would be a logical level for buyers to step in with demand, though this cart looks weak. Momentum is negative. Relative strength is at a key level and on the verge of break down. NVDA’s intermediate term trend is rangebound above $195.50.
Berkshire Hathaway. Click to enlarge.
The famed Berkshire Hathaway lost 2.55% in value last week. Price continues to revert towards its trendline and upward sloping 40-week simple moving average. Price printed a 4-week closing low. Momentum is testing its upward sloping trendline from above. Relative strength has been flat for the last 3 weeks, but is in an uptrend. BRK.B is in an uptrend.
UnitedHealth Group. Click to enlarge.
UNH lost 2.60% 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.
Johnson & Johnson. Click to enlarge.
JNJ gained 0.91% in value last week. Price hit its Fibonacci target and was rejected. This level was around $181.52, which marks its 161.8% Fibonacci extension from the pre-Covid peak to its Covid-low. Above $182.52, its next extension, 261.8% is around $227.86. Momentum is strong. Relative strength is strong and the smoothed 40-week simple moving average is beginning to remain sloping upward. JNJ is in an uptrend.
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