Edition 0008. 03.05.2022.
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.
Last week we saw weakness in the US equity landscape. Two weeks ago our universe of symbols were up on average 1.17% while this week we are down on average 0.49%.
Strong week from the Dow Jones Averages. The utility average has broken above the pre-covid highs and out of that massive ascending triangle we have been watching to make an all-time closing high. DJT also closed higher to record a 4-week closing high, though quantitative trend and momentum remain neutral. Our weekly laggard was the tech heavy Nasdaq 100, QQQ.
Performance table sorted by the year-to-date rate-of-change.
Relative Comparison Chart. This shows the year-to-date performance.
Happily, for the first time YTD we have a symbol in our universe that is positive! That symbol is the Down Jones Utility Index. I can speculate, but I don’t know why. The common perception of utility stocks is that they function as bond proxies because of their dividend yields. Bonds were up last week. Staples, XLP, was also up, which has a slightly higher dividend yield on average than XLU. DJT climbed from 5th to 2nd.
The U.S. Landscape Charts
QQQ: The Nasdaq 100 ETF
QQQ closed lower and gave back 2.45% in value. There was no follow through after the hammer candle 2 weeks ago and price remains below the October 2021 swing low of $350. The 40-week simple moving average continues to flatten out from its upward slope. Momentum is strongly negative as price records a new 13-week closing low. Volume remains elevated. Price remains range bound at best.
Standard & Poor’s ETFs
SPY: The S&P 500 ETF
SPY also closed lower and gave back 1.27 in value. There was no follow through after the hammer candle 2 weeks ago, but unlike QQQ price is still above its October 2021 swing low of $426, but below its still upward sloping 40-week simple moving average. Momentum has turned negative. The doji candle indicates indecision as shares change hands on elevated volume as price makes a new 13-week closing low. Price remains range bound.
IJH: The S&P 400 ETF
IJH closed lower and gave back 1.79% in value, making it the worst S&P ETF of the group. Price continues to close below its downward sloping 40-week simple moving average with negative momentum. Price does remain rangebound above the bottom zone of its 10-month trading range as it a mkes a new 4-week closing low.
IJR: The S&P 600 ETF.
IJR closed lower and gave back 0.84%. Price closed below its downward sloping 40-week simple moving average with negative momentum. Price remains rangebound above the bottom of its 12-month long trading range.
The Russell ETFs
IWB: The Russell 1000 ETF.
IWB closed lower, giving back 1.49% in value. The 40-week simple moving average is still rising, barely. Price is holding above $237 which marks the lower zone of its 8-month trading range. Momentum is negative and steady as price makes a new 13-week closing low.
IWM: The Russell 2000 ETF.
IWM closed lower, giving back 1.9% in value. Price remains below its downward sloping 40-week simple moving average and above its January 2021 swing lows at $191. Momentum remains negative though it did decelerate slightly. Price remains in a downtrend.
Dow Jones Indices
DJT: Dow Jones Transportation Average.
The transports gained for a second week in a row as price closed above its downward sloping 40-week simple moving average to record a new 4-week closing high. Momentum made a stand at its 0-line. Price remains range bound at best.
DJI: Dow Jones Industrial Average.
The industrials closed lower last week with a loss of 1.3% in value. Price made a new 13-week closing low just above the lower boundary of its 10-month trading range. Momentum is negative and accelerating to the downside. Price is range bound at best.
DJU: Down Jones Utility Average.
The utilities average was the best performing symbol in our landscape for the 2nd week in a row. Excitingly, price closed at an all-time high above its pre-covid highs. Does this turn the prior failed breakout a pre-mature breakout? Time will tell. Its a beautiful bullish marabozu candle on elevated volume. That said, momentum is holding above its upward sloping trendline but it did not confirm the new high in price. I’ve also added a 10-period RSI to show that price did not quite reach overbought levels. I looked through the tools, but it’s close. A 10-period, 2 standard deviation, Bollinger Band, a 10-period slow stochastic, a 10-period RSI, a 10-period CCI do not show overbought. However, looking at a 10-period Williams %r or a fast stochastic will show you overbought. Smoothed momentum measures do not confirm the breakout, while quicker measures do. Rather than succumb to indicator analysis paralysis, let us let price be the final arbiter here. DJU is the only symbol in our US equity universe to be in a quantitative uptrend with a positive momentum condition.
Conclusion
It is a tough environment for US equites right now, though I am thrilled to say DJU has now given us a small gain YTD. Of our 9 symbols 1 is in an uptrend, 1 is in a downtrend, and 7 are in ranges. This market continues to be a mixed bag that is vulnerable. It’s beaten does under the surface, but at the index level there is still hope that we have paused to digest gains as we get ready for our next leg higher. Obviously chopping around and moving sideways or breaking down remain as options on the table.
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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