[PLUS] Weekly Momentum Report & Takeaways

Steve Strazza
April 25, 2021

From the desk of Steve Strazza @Sstrazza and Ian Culley @IanCulley

Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.

By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the context of the big picture and provides insights regarding the structural trends at play.

Let's jump right into it with some of the major takeaways from this week's report:

* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.

Macro:

  • Procyclical Commodities led this week, with Copper up over 4% and Lumber posting a solid 6% gain.
  • With that said, the biggest loser of the week was Crude Oil (-1.57%), which is also cyclical in nature... This is a good example of how things are just messy right now.
  • We had a single asset make a new low this week... The US Dollar Index $DXY was the only asset on our list to make a new low this week (1-month low).
  • New highs continue to be abundant across all timeframes, particularly from risk assets like Stocks and Commodities.
  • Over 70% of the assets on our macro list are in bullish momentum regimes (71%).

International:

  • China A-shares $ASHR were this week's big winner with a 4.38% gain.
  • We had several bullish reversals from European countries such as the Netherlands, Spain, Portugal, and Austria.
    • There was also notable strength from Northern European countries, such as Finland and Denmark, both of which confirmed their fresh record closing highs from the prior week with impressive follow-through (see chart below).
    • Long-term laggard, Egypt $EGPT...  and long-term leader, Taiwan $EWT also posted solid gains this week.
  • Turkey ($TUR -6.69%) and Peru ($EPU -11.14%) got hit hardest as both sold off considerably.
  • Overall, global equities were mixed on the week as just over half of our universe closed higher with a muted median return of +0.08%. 
  • Things still look good from a structural perspective as 87% of the ETFs on our list are in bullish momentum regimes.

US Sectors:

  • Equal-weight indexes continue to outperform their cap-weighted peers, as well as their Small and Mid-Cap counterparts... This is evidence of broad participation as bullish internals continue to support the new highs for the major averages.
    • Over the short term, this is evidenced by the Equal-Weight S&P 500 $RSP booking a gain on the week while $SPY was slightly lower. 
      • Additionally, the daily momentum reading for RSP is higher.
    • Although, when you look at the performance off their 52-week lows, it's clear that this trend has been in place for some time now as RSP is up over 70% vs a measly 50% for SPY.
  • Real Estate led the way this week as the Equal-Weight Sector ETF $EWRE and Large-Cap Sector SPDR $XLRE were the top-performers as both registered new all-time highs (confirmed by overbought momentum readings).
  • The correction for Energy stocks continues as Small-Cap Energy $PSCE was the biggest loser on the week, falling by over -4%.
    • The four Energy sector indexes made fresh 21-day lows (these were the only new lows on the week).
  • Notice all of the bullish reversals from small- and mid-caps..? This is something we're keeping a close watch on as they could reassert their former leadership roles soon.
  • Momentum is stellar across the board with every single sector remaining in a bullish regime.

US Industry Groups:

  • Clean Energy and Lithium led the way this week ($TAN +6.4%, $LIT +4.2%, FAN +2.4%).  
  • To no surprise, the Energy subsector ETFs were the worst performers with Oil Services $OIH and Exploration & Production $XOP giving back another 4% and 2%, respectively.
  • Overall, there is very little structural damage as 89% of industry groups remain in a bullish momentum regime with a median daily RSI reading of almost 60.
  • New highs continue to significantly outnumber new lows across all timeframes.

That's it for this week's highlights!

Click here to access the report.

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