Edition 0017. 09.16.2022. Week of 09.12 - 09.18.2022
To help inform our perspective on the broader equity indices, we will analyze the 10 largest companies, by market capitalization, in the S&P 500. I collectively refer to these top 10 companies as The Generals.
Key Takeaway(s)
The Generals are mostly in downtrends with AAPL, SPY’s largest component, rangebound.
This week was another week with more generals printing ranked closing lows than ranked closing highs.
The group is, on average, 21.25% below and 34 weeks removed from its last 52-week closing high.
Only 2 generals are positive on a YTD basis, XOM and UNH.
Analyzing The Generals points to additional broad market weakness ahead.
Introduction
As of today’s close, Friday 09/16/2022, The Generals account for 29.21% of SPY’s (the S&P 500 market-cap weighted ETF) market capitalization. For reference, the largest sector, the technology sector (XLK), weights about 26.5% while Energy (XLE) weights about 4.5%. The current sector weightings can be found here: https://www.sectorspdr.com/sectorspdr/. The table below lists the current top 10 companies along with their ranks, weights, and trends.
Using subjective technical analysis, The Generals contribute the following to SPY:
About a 19.25% contribution to SPY’s market cap as a downtrend.
Roughly a 9.75% contribution to SPY’s market cap as a trading range.
A 0% contribution to SPY’s market cap as an uptrend.
The subjective trend is defined by patterns of highs and lows. This article speaks to the intermediate-term trend, not necessarily the long-term trend. Click here to learn more about the subjective and quantitative trends.
The General's Market Capitalization & Trend Table
Click to enlarge.
The chart below shows us how each general, and SPY, has performed this year-to-date (YTD).
Only two of the ten largest companies have YTD gains. XOM is up 52.33% and UNH is up 3.76%.
Six of the ten companies are outperforming SPY, YTD, on an absolute basis: XOM, UNH, JNJ, BRK.B, TSLA, and AAPL.
AMZN, MSFT, GOOGL, and META are underperforming SPY, YTD, on an absolute basis.
Year-to-date performance chart
Click to enlarge.
To dig deeper, before we get to the price charts, have a look at the performance table below. It has a lot of information, so if you’re interested, click here for an explanation.
The table is sorted by the 1-week rate-of-change, in descending order. This shows us:
Performance/Relative Strength -
TSLA and JNJ closed the week with gains and outperformed SPY.
UNH, XOM, BRK.B, and AAPL lost value on the week, though outperformed SPY.
GOOGL, AMZN, MSFT, and META lost value and underperformed SPY.
The rightmost column ranks each general’s relative strength against SPY from 0 to 100. This is on a rolling 52-week basis with emphasis given to 13-weeks. 100 is the strongest rating and 0 is the weakest. We see leadership from XOM, TSLA, and UNH. They have the highest 3 rankings and are above 80.
Highs/Lows -
TSLA printed a 13-week closing high as shown with the yellow 2 in the Rank_ClosingHighs column.
AMZN, AAPL, and XOM printed 5-week closing lows as shown with the yellow 1s in the Rank_ClosingLows column.
BRK.B printed a 13-week closing low as shown with the yellow 2 in the Rank_ClosingLows column.
MSFT, META, and GOOGL printed 52-week closing lows as shown with the yellow 3s in the Rank_ClosingLows column.
Spy itself printed a 5-week closing low as shown with the yellow 1 in the Rank_ClosingLows column.
On average, The Generals are about 21.25% above their last 52-week closing low, 25.25% below their last 52-week closing high, and 49.5 weeks from those 52-week closing highs.
Trend/Momentum -
UNH and XOM are in quantitatively positive intermediate-term trends, though their momentum condition is neutral. Using subjective technical analysis (TA), I would instead argue, the intermediate-term trends in UNH and XOM are rangebound and we are awaiting resolutions.
TSLA has quantitatively positive momentum with a quantitatively neutral trend, and AAPL has quantitatively positive momentum with a quantitatively negative trend. Using subjective TA though, I argue the intermediate-term trend in TSLA is down while AAPL's is rangebound.
Performance table sorted by the 1-week rate-of-change.
Click to enlarge. Click here for an explanation.
The Charts
Apple. Click to enlarge.
MSFT. Click to enlarge.
Alphabet. Click to enlarge.
Amazon. Click to enlarge.
Tesla. Click to enlarge.
Meta Platforms. Click to enlarge.
XOM. Click to enlarge.
Berkshire Hathaway. Click to enlarge.
UnitedHealth Group. Click to enlarge.
Johnson & Johnson. Click to enlarge.
As always, thank you for reading. This article is for educational and informational purposes only. Trade at your own risk. The author may or may not have a position in the securities mentioned. Read our full disclaimer here. Please reach out with any feedback or comments. I would love to know if you agree, disagree, or don't care at all. Louis@eastcoastcharts.com
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