Edition 0006. 03.05.2022.
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, momentum, and breadth. By having an in-depth understanding of what 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
JPM has fallen out of the top 10, and UNH is back. NVDA and BRK.B switched places last week.
Overview.
Performance table sorted by the 1-week rate-of-change.
Last week The Generals lost 1.22% in value. 3 of the 10 symbols finished higher. UNH lead and AMZN lagged. BRK.B printed an all time closing high. FB printed a 52-week closing low. BRK.B remains the only symbol in an uptrend and with positive momentum on our quantitative model.
Relative performance chart. This shows the year-to-date performance in a more visual way.
The year-to-date picture remains largely unchanged. BRK.B is positive while none other Generals are. UNH is making a run at the 0-line.
The Generals geometric average and relative strength.
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 12,26,09 Percentage Price Oscillator.
The Generals have been down trending since their December peak. Price remains below its still upward sloping 40-week simple moving average. Relative strength peaked a month later, and, while not exactly down trending, broke below its November 2021 lows.
The Generals geometric average and advance-decline data.
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 advance-decline line peaked at the same time as price. Now it is moving down to its upward sloping 40-week simple moving average. The advance-decline percentage peaked then too. Last week we saw 37.5% of the Generals advance, so 6 of 16, and the moving average of AD% remains in territory and declining.
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.
As The Generals trends downward, so too does the number of stocks above key moving averages. 25%, or 4 of 16, Generals closed above their 10-week simple moving averages. 37.5%, or 6 of 16, Generals closed 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 remains in an uptrend with price above its rising 40-week simple moving average. Momentum is breaking below its upward sloping trendline. Relative strength remains above its December 2021 breakout level. Apple remains in an uptrend.
MSFT
Microsoft has closed below its upward sloping 40-week simple moving average for the last 4 weeks now. This is the first time in almost two years price has been below its average. Momentum continues to decelerate, though momentum is now negative. Relative strength remains in a coil pattern and dancing about its upward sloping 40-week simple moving average of relative strength. Microsoft remains in an uptrend, barely.
Alphabet
Goog remains below its upward sloping 40-week simple moving average. Momentum is now below its 0-line. Relative strength has been improving, but last week it was rejected from its still upward sloping 40-week simple moving average of relative strength. Alphabet is rangebound.
Amazon
Amazon closed for the 10th week in a row below its now downward sloping 40-week simple moving average. Momentum is decelerating thought negative. Relative strength remains trending downward below its downward sloping 40-week simple moving average. Amazon remains rangebound.
Tesla
Tesla was one of hte 3 generals that closed with a gain last week. Price remains below its still upward sloping 40-week simple moving average. Momentum is weakening and very close to its 0-line. Relative strength was able to hold its upward lsoping 40-week simple moving average. Price remains rangebound.
Meta Platforms
Meta Platforms is sitting continues to break down and hold below $207 but above $200 which was resistance in July 2019. Momentum is negative and so is relative strength. FB remains in a downtrend.
Nvidia
Nvidia is pausing its uptrend and in a coil pattern. Volume is elevated. This shows there is significant supply and demand. Buyers cannot aboard the supply fast enough to push the stock higher. Momentum is decelerating as it approaches its 0-line. Relative strength is testing it upward sloping 40-week simple moving average of relative strength. NVDA remains in an uptrend.
Berkshire Hathaway
The famed Berkshire Hathaway is our only General in a confirmed uptrend with a positive momentum condition according to our quantitative measures. It is also the only general showing a YTD gain. Price continues upward above the $295 breakout level. Price is above its upward sloping 40-week simple moving average. Momentum is positive. Relative strength is very strong. BRK.B is in an uptrend.
UnitedHealth Group
UNH remains in an uptrend. It is knocking on the door of its all-time high. Momentum is trying to get above its average line and lead price. Relative strength looks great above its upward sloping 40-week simple moving average. UNH remains in an uptrend.
Conclusion
The generals as a whole are losing strength against the S&P 500. The majority of The Generals’ momentum remains negative and questionable. Breadth is breaking down. Only 1 general is positive this year-to-date. That said, Apple, Microsoft, Alphabet, Nvidia, Berkshire Hathaway, and UNH are still in a position for another leg up should buyers step in.
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