From the desk of Steve Strazza @Sstrazza
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. We can then put these near-term developments into the context of the big picture and glean insights into 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 Universe:
- Procyclical Commodities gave back some of their recent gains this week.
- Copper was down over 2.34%. However, the primary trend remains intact with momentum in a bullish regime.
- Lumber was the hardest hit this week, dropping over 7% reversing its extreme momentum reading from last week to 64 this week.
- New short-term lows across the board in many US equity indexes, from the S&P to Dow Utilities, and even SMIDs.
- Value-heavy areas bucked the trend as indexes like the Dow Industrials & Transports, along with Russell Value and S&P High Beta made new all-time highs early in the week.
- Although, even these leadership areas gave back their gains throughout the week as every single US equity index on our list closed in the red (with the exception of High Dividend $HDV +0.12%).
- Looking outside of the US and equities were slightly stronger with new all-time highs from the Global Dow, EFA, and All Country Ex-US index to start the week.
- Similar to the US, prices reversed lower during the week and most indexes closed in the red with Emerging Markets $EEM leading to the downside.
- Frontier Markets $FM bucked the trend and posted a roughly 1.5% gain as the index finally reclaimed its pre-COVID levels with fresh 52-week highs...
- The biggest winner of the week was the Volatility index $VIX which rallied by over 12%.
- 77% of the assets on our macro list are in a bullish momentum regime.
- The amount of extreme overbought readings dropped from 21% last week to just 2% this week.
International Universe:
- International Equities struggled as over 70% of our list closed the week in negative territory with a median return of -0.97%.
- About 30% of our list made new 21-day lows on the week, while 44% made new short-term highs.
- Peru $EPU was this week’s big winner with a 7% gain.
- Taiwan $EWT was this week’s big loser, falling -8.7%.
- Little to no structural damage has been done as 65% of the ETFs on our list are still within 5% of their 52-week highs.
- Structurally, the outlook remains healthy as 84% of the ETFs are in a bullish momentum regime.
US Sector Universe:
- The average sector was lower by -1% with isolated strength from areas such as Staples and Energy.
- The biggest winner of the week was Mid-Cap Energy which gained 2.11%.
- Mid and Small-Cap Technology remain in bearish regimes.
- Equal Weight and Mid-Cap Consumer Discretionary posted bearish reversals and led our list lower with some large losses.
- We had a mix of new highs and lows across shorter timeframes.
- 36% of our Sector universe made new 21-Day lows.
- While over half our list made new 52-week highs on the week, only few could hold them as nearly 80% closed in negative territory.
- Not only are we seeing broad weakness in US sectors and indexes, but we're seeing it at very logical levels of overhead supply.
- For example, in the large-cap space alone - Industrials, Real Estate, Discretionary, and Health Care are all trading at or near our targets...
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- We're seeing similar developments from the major indexes such as Transports and Industrials which you can read more about here.
- 81% of sectors are still within 5% of their 52-week highs.
- The outlook still remains strong from a structural perspective as 96% of our list is in a bullish momentum regime.
US Industry Universe:
- The biggest winner of the week was Pharmaceuticals $XHP which gained 1.40%.
- Weakness was also evident in our US Industry list as 73% of our universe closed lower with a median return of -1.21%.
- Home Construction $ITB was this week’s big loser falling -5.45% and posting a bearish reversal.
- 42% of industry groups made fresh 21-Day lows this week.
- We had 4 bullish reversals this week ($KBE, $KRE, $PBJ, $QABA).
- Momentum regimes continue to look good from a structural perspective, as 82% of the industry ETFs on our list are bullish.
That’s it for this week’s highlights!
Thanks for reading and please let us know if you have any questions!
Allstarcharts Team
