Edition 0004. 02.19.2022.
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, and momentum, and breadth. By having an in-depth understanding of that 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 accelerating. 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
Last week there were no changes to the rankings.
Overview.
Performance table sorted by the 1-week rate-of-change.
Last week 0 of the generals closed with a gain. On average, The Generals lost 1.95% of ground last week while the SPY gave back 1.41%. Year-to-date, the only general that has gained in value is Berkshire Hathaway which is up 5.28 this year. It is also worth noting, from a quantitative perspective, it is the only general with a positive trend and momentum condition. There was no change in quantitative trend and momentum last week. We do have MSFT making a 13-week closing low and FB making another 52-week low. 7 of the 10 generals do have an upward sloping 40-week SMA of relative strength against SPY.
Relative performance chart. This shows the year-to-date performance in a more visual way.
No changes to leadership last week.
The Generals geometric average and relative strength.
The middle panel is a geometric average of the 10 generals. 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.
We can see that the Generals average has made a lower-low, a lower-high, and is now breaking below its 40-week simple moving average and attempting to make a lower-low. Momentum is accelerating downwards towards its 0-line. The relative strength is also breaking down and the RS line is breaking below its upward sloping 40-week simple moving average.
The Generals geometric average and advance-decline data.
The top panel is a geometric average of the 10 generals. 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 10 stocks.
Last week we can see the cumulative AD line has broken below its coil and looking to test its upward sloping 40-week simple moving average from above. We can also see that 0% of the generals advanced, so 0 of the 10 symbols, while the 10-week average has dropped from 51% to 42%. The average line below 60% and above 40% shows indecision and lack of conviction.
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.
We can see that the Generals average has broken below its upward sloping 40-week simple moving average and working on making a lower-low. The middle panel shows us that only 10%, so 1 out of 10, generals are above their 10-week simple moving averages. The bottom panel shows us that 40%, so 4 of 10, generals are above their 40-week simple moving averages.
The Charts
Note: Goog and Googl are very similar, and until there is a change, the analysis of Goog represents both charts.
Apple
Apple closed last week with a loss of 0.79%. We are just 10 weeks from the last all-time closing high and the trend looks strong. Momentum and relative strength did confirm that last all-time closing high, but now momentum is crossing below its average and heading to test its upward sloping trendline. The relative strength looks strong as it holds above its breakout level. As Apple goes, so too goes the market.
MSFT
Microsoft closed with a loss of 2.41% in value last week. For the first time in years, MSFT has closed below its 40-week simple moving average and 2 weeks in a row at that, just 12 weeks off of its all-time closing high. Momentum is accelerating to the downside, but as a long as we hold the $280 level, the trend remains intact. Relative strength is declining and testing its upward sloping 40-week simple moving average of relative strength.
Alphabet
Alphabet closed down 2.73% last week. Price has closed below its 40-week simple moving average for the 3rd time in 5 weeks. Momentum is accelerating to the downside. Relative strength has broken below support of its upward sloping 40-week simple moving average of relative strength.
Amazon
Amazon closed down 0.45% last week. Price remains below its now downward sloping 40-week simple moving average. Momentum is negative, but potentially decelerating. Relative strength has broken above its downward sloping trendline and moving closer to its falling 40-week simple moving average of relative strength.
Tesla
Tesla finished the week down 0.35%. TSLA is still above its upward sloping 40-week moving average, but momentum is accelerating to the downside. Relative strength is breaking below its upward sloping trendline, but it is still above its rising 40-week simple moving average.
Meta Platforms
FB gave back another 6.10%. Momentum continues to accelerate to the downside with price making a 52-week closing low again. Breaking $207 might very well lead all the way down to the $150 area which marks the Covid 2020 lows. Relative strength is making a 3-year low.
Nvidia
NVDA had earnings last week on Wednesday 02/16 after the market closed. It beat on earnings and sales. The CEO said he sees exceptional demand continuing because of the use of NVDA’s chips for AI and other intensive applications. He also said he sees supply constraints easing. They issued strong guidance. Last week NVDA gave back 1.28%. Price is still above an upward sloping 40-week simple moving average. Momentum is decelerating to the downside. Relative strength is attempting a breakout while above its upward sloping 40-week simple moving average of relative strength.
Berkshire Hathaway
The famed Berkshire Hathaway lost 1.36% last week. Notably, it is also the only general that has a positive return this year-to-date with a gain of 5.28%. 5 weeks from its last all-time closing high, continues its trend. Momentum looks strong but is decelerating slightly. The relative strength line has successfully tested previous resistance to confirm it as support.
J.P Morgan Chase & Co.
JPM lost 1.16% in value last week. Price is below its downward sloping 40-week simple moving average, but still above its upward sloping trendline. Momentum has turned negative but is now decelerating. Relative strength is below its downward sloping 40-week simple moving average of relative strength but above its downward sloping trendline.
Conclusion
The generals are losing strength against the S&P 500. The majority of momentum is questionable. Only 1 general is positive this year-to-date. We will need to see if the selling continues, or not
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