Edition 0007. 02.26.2022.
This weekly commentary examines 9 U.S. equity Indices and ETFs to develop a clear picture of how the U.S. market is performing. We analyze performance, price, trend, and momentum.
While it is true that this is a market of stocks, looking at the major indices helps chartists and technicians by pointing to areas of the market that require further investigation, be it for strength, for weakness, or a potential future move. This chart list covers the great majority of the U.S. Equity landscape. We’ve spent a lot of time deciding which charts to include, more so which charts to exclude, and after a lot of analysis we believe this chart list is a comprehensive look at the U.S. equity landscape.
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.
For more information about the symbols that are a part of this landscape, click here.
The U.S. Equity Landscape Summary
Performance table sorted by the 1-week rate-of-change.
Two weeks ago we had 0 of the 9 symbols in our universe finish in the green, while last week we had all but 1 finish in the green. The Dow Jones Utility Average led the pack while the Dow Jones Industrial Average lagged.
The bounce in US equities led to the universe making less new closing lows and more 4-week closing highs.
The general trend and momentum conditions remain the same as two weeks ago, though the Dow Industrials Average is now in a negative momentum condition while the Dow Utilities remounted its upwards sloping 40-week simple moving average.
Performance table sorted by the year-to-date rate-of-change.
Relative Comparison Chart. This shows the year-to-date performance.
YTD we see a change in “leadership” as the Dow Jones Utility Average takes over the least bad position as the Dow Industrials drop into third below the Utilities and S&P 400-mid caps IJH.
The U.S. Landscape Charts
QQQ: The Nasdaq 100 ETF
QQQ formed a hammer candle as it found support above its May 2021 swing lows and its 38.2% Fibonacci retracement level from the Covid 2020 low to its November 2021 all-time closing high. Price is below its still upward sloping 40-week simple moving average. The negative momentum did decelerate last week. The trend is on the verge of being a downtrend.
Standard & Poor’s ETFs
SPY: The S&P 500 ETF
SPY also closed to form a hammer candle showing buyers stepped in as price held above its October 2021 lows. Price closed below its still upward sloping 40-week simple moving average. Momentum decelerated last week as it just held its 0-line. SPY remains rangebound.
IJH: The S&P 400 ETF
IJH saw buyers as it tested its July 2021 lows for the 2nd time in 5 weeks. It did gain on the week, though price still closed below its downward sloping 40-week simple moving average. Momentum did decelerate though it is still negative. IJH remains rangebound.
IJR: The S&P 600 ETF.
IJR gained on the week, though closed below its downward sloping 40-week simple moving average. Buyers stepped in as it tested the $102.50 level again which is the swing low from back in March 2021. Momentum is flat and negative. IJR remains rangebound.
The Russell ETFs
IWB: The Russell 1000 ETF.
IWB did form a hammer to hold support around $237 which is the swing low from July 2021. Price did close below a still upward sloping 40-week simple moving average. Momentum did decelerate though remains negative. IWB remains rangebound.
IWM: The Russell 2000 ETF.
IWM continued to rally in its downtrend. Price did find buyers around $191 which marks the January 2021 swing low, but price has closed below its downward sloping 40-week simple moving average. Momentum did decelerate, though it remains negative.
Dow Jones Indices
DJT: Dow Jones Transportation Average.
The transports gained in value last week. Price went down to test 14,000, which marks a measured move out of the descending triangle and the swing lows from early October 2021, and buyers stepped in. Price closed below its downward sloping 40-week simple moving average. Momentum has decelerated and remains above its 0-line. Price is rangebound.
DJI: Dow Jones Industrial Average.
The industrials broke below 33,515, which marks its swing lows from May 2021, but closed back in the trading range and below its downward sloping 40-week simple moving average. Momentum has now broken below its 0-line and is negative. Price is rangebound for now.
DJU: Down Jones Utility Average.
The utilities average was the best performing symbol in our landscape last week. Price closed above a still upward sloping 40-week simple moving average. Momentum did decelerate but remains concerning as it is below its average line and below its now broken upward sloping trendline. This is the only symbol that can be considered still in an uptrend.
Conclusion
It is a tough environment for US equites right now. They are all down YTD. The Dow Utilities Average is the only symbol that, with some arguing, can said to remain in an uptrend. There is a chance that the rangebound symbols are simply pausing before their next leg higher, though there is a chance they are pausing before sellers decide to step in.
About The Landscape
In the descriptions of the symbols that follow, I will reference the current weights of the component sectors to point out the makeup. These weight are constantly changing, and while the values are current as of the writing this edition, they will change when you look for yourself. Some families publish the current weightings quarterly, while others maintain real-time measurements. Links are provided to the source data.
QQQ: The Nasdaq 100 ETF
We look at the Nasdaq 100 Invesco ETF, QQQ, to get an idea of what tech is doing. Managed by Invesco, the Nasdaq 100 is a market-cap weighted ETF, launched in 1985, that tracks the top 100 non-financial companies listed on the Nasdaq Exchange. It is rebalanced quarterly. QQQ is dominated by tech which makes up roughly 50% of its cap weight. Next is communication services at 18.5% and consumer discretionary at 16.5%. The remaining non-financial sectors are less than 6% each of market cap.
Source - https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&ticker=QQQ
Standard & Poor’s ETFs
These ETFs are maintained by S&P Global. They are groups of companies based on the size of their market capitalization. To be included, the company must meet a financial viability criterion, so all companies included in these ETFs have at least 4 consecutive quarters of positive earnings. These are rebalanced quarterly.
Standard & Poor's define the cap tiers as follow:
Source: Source: https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-us-indices.pdf
SPY: The S&P 500 ETF
SPY tracks US large. While not as heavily weighted with technology, like QQQ, tech does carry the largest weight in the 500 at roughly 30%. 13% heath care and consumer discretionary. 11% financials and 10% communication services. 8% industrials. The remaining sector are all less than 6% by weight.
IJH: The S&P 400 ETF
IJH tracks US mid-cap stocks. Industrials hold the largest weight at 19%. 16% for consumer discretionary, and 14% for tech and financials. 10% real estate and healthcare. The remaining sectors make less than 4% of cap weight each.
IJR: The S&P 600 ETF.
IJR tracks US small-cap stocks. Like the midcap ETF, Financials hold the largest weight at 19%. 17% industrials. 14% tech. 12% healthcare and consumer discretionary. 8% real estate. The remaining sectors make less than 5% of cap weight each.
The Russell ETFs
While the Russell Indices are maintained by FTSE Russell, these ETFs that track the indices are maintained by iShares. These are market-cap weighted, and much broader in number than the S&P ETFs and QQQ. These are rebalanced just once per year instead of quarterly like the S&P ETFs and QQQ. Unlike the S&P ETFs, there is no financial viability requirement to be included.
IWB: The Russell 1000 ETF.
The IWB tracks the performance of the largest 1000 companies from the Russell 3000. Mostly large with some mid-caps. 28% Tech. 13% health care. 12% consumer discretionary and financials. 10% communication services. 9% industrials. The remaining sectors are less than 6% each.
IWM: The Russell 2000 ETF.
The IWM tracks the performance of the next 2,000 US companies from the Russell 3000. It is made of small-caps. 17% healthcare and financials. 15% industrials. 14% tech. 11% consumer discretionary. 8% real estate. The remaining sectors are less than 5% each.
Dow Jones Indices
I cannot stress the importance of Charles H. Dow. His thinking and work is the springboard for way markets are viewed and price action is interpreted today. His work has led to the modern discipline of Technical Analysis. His importance cannot be overstated. His ideas must be studied.
He created the first modern stock index in the form of the transportation index, which was then the railroad index, in 1884. Next, he created the industrial average in 1896. Finally, when utility tocks were removed from the industrial average, the utility index was created in 1929. These averages are price-weighted and not cap weighted. The impact from the largest companies are still relevant, though less so than with a cap weighted index. These small, in number not market cap, indices track the companies considered most prominent in the economy today. Like the S&P ETFs and QQQ, these indices are maintained by S&P Global and rebalanced quarterly.
DJT: Dow Jones Transportation Average.
20 companies. 100% industrials.
DJI: Dow Jones Industrial Average.
30 companies. 22% tech. 18% healthcare. 16.% financials and consumer discretionary. 15% industrials. 8% consumer staples. The remaining sectors make up less than 4% of weight by price.
DJU: Down Jones Utility Average.
15 companies. 100% Utilities.
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