Edition 0003. 02.12.2022.

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, and momentum, and breadth. By having an in-depth understanding of that 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 = 5-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 General's Market Capitalizations

This week the weight of the Generals remains the same, except UNH has been removed from 10th place and replaced by JPM.

## Overview.

__Performance table sorted by the 5-day rate-of-change.__

Three weeks ago we had 7 of the 10 generals close with a gain. Two weeks ago he had 8 close with a gain. Last week we had only 2 close with a gain. On average, The Generals, lost ground last week. They closed with an average loss of 3.45% while the SPY gave back 1.84%. Year-to-date, the only general that has gained in value is Berkshire Hathaway which is up 1.32% for the week and 6.73% for the year. It is also worth noting, from a quantitative perspective, it is the only general with a positive trend and momentum condition. We can also see the deterioration in the trend condition for Microsoft and Alphabet which both shifted from positive to neutral. Facebook made another 52-week closing low.

__Relative performance chart. This shows the year-to-date performance in a more visual way.__

Still the only general showing a positive year-to-date return is BRK.B. JPM is now a General and taken over 2nd positions. UNH jumped up from 5th to 2nd.

__The Generals geometric average and relative strength.__

The middle panel is a geometric average of the 10 generals. 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.

We can see that the Generals average has made a lower-low, a lower-high, and is now breaking below its 40-week simple moving average and attempting to make a lower-low. Momentum is accelerating downwards towards its 0-line. The relative strength is also breaking down and the RS line is breaking below its 40-week simple moving average.

__The Generals geometric average and advance-decline data.__

The top panel is a geometric average of the 10 generals. 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. Last week we had 8 of 10 generals advance, so it moved higher.

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 10 stocks.

This week we can see that 20% of the generals advanced, so 2 of the 10 symbols, while the 10-week average reads 51%. The average line below 60% and above 40% shows indecision and lack of conviction.

__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.

We can see from the middle panel that only 10%, so 1 out of 10, generals are above their 10-week simple moving averages. The bottom panel shows that 40%, so 4 of 10, generals are 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 closed last week with a loss of 2.18%. We are just 9 weeks from the last all-time closing high and the trend looks strong. Momentum and relative strength did confirm that last all-time closing high, but now momentum is crossing below its average. There is still support below from its rising trending. The relative strength Looks strong as it holds above its breakout level. As Apple goes, so too goes the market.

MSFT

Microsoft closed with a loss of 3.56% in value last week. For the first time in years, MSFT has closed below its 40-week simple moving average, just 12 weeks off of an all-time closing high. Momentum is accelerating to the downside, but as a long as we hold the $280 level, the trend remains intact. Relative strength is declining and testing its 40-week simple moving average.

### Alphabet

Alphabet closed down 6.21% last week. Price has closed below its 40-week simple moving average for the 2nd time in 4 weeks. Momentum is still decelerating. Relative strength is testing support at its 40-week simple moving average.

### Amazon

Amazon closed down 2.76% last week. Price remains below its now downward sloping 40-week simple moving average. Momentum is negative, but potentially decelerating. Relative strength is still above its downward sloping trendline, but below a its falling 40-week simple moving average.

### Tesla

Tesla finished the week down 6.86%. TSLA is still above its upward sloping 40-week moving average, but momentum is accelerating to the downside. Relative strength is breaking below its upward sloping trendline, but it is still above its rising 40-week simple moving average.

### Meta Platforms

FB gave back 7.40%, which is an improvement from the -21.42% loss two weeks ago. Momentum continues to accelerate to the downside with price making a 52-week closing low. Relative strength is making a 3-year low.

Nvidia

NVDA is just a few days ahead of earnings on Wednesday 02/16 after the market closes. Last week NVDA gave back 1.52%. Price is still above an upward sloping 40-week simple moving average. Momentum is accelerating to the downside. Relative strength is attempting a breakout while above its 40-week simple moving average.

### Berkshire Hathaway

The famed Berkshire Hathaway gained 1.32% last week. Notably, it is also the only general that has a positive return this year-to-date with a gain of 6.73%. 4 weeks from its last all-time closing high, price found support at $295. $295 was resistance that was tested 3 times throughout 2021, and now it has been confirmed as support. The previous bullish piercing line candle was confirmed with a close higher last week. While we see some selling, price is moving higher. Momentum looks strong and the relative strength line has successfully tested previous resistance to confirm it as support.

### J.P Morgan Chase & Co.

JPM gained 0.89% in value last week. Price is below its downward sloping 40-week simple moving average, but still above its upward sloping trendline. Momentum has turned negative, but is now decelerating. Relative strength is below its sloping 40-week simple moving average, but it is turning up.

## Conclusion

The generals are losing strength against the S&P 500. The majority of momentum is questionable. Only 1 general is positive this year-to-date. We will need to see if the selling continues, or not.

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