Edition 0002. 01.23.2022.
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 down ma.
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 line 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 = 21 day closing high or low.
2 = 63 day closing high or low.
3 = 252 day closing high or low.
4 = all-time closing high or low.
In the descriptions of the symbols, I will reference the current weights of the component sectors to point out the makeup. These weights are constantly changing, and while were current on 01/15/2022, they almost certainly have changed since then. Links for the most up-to-date weights are provided with links below.
For more information about the symbols that are a part of this landscape, click here.
The U.S. Equity Landscape Summary
Summary table. Sorted by the 5-day rate-of-change.
This first table is sorted by the 5-day rate-of-change. Last week we had 2 of our 9 symbols close positively, but this week we had 0. Every symbol closed with a loss. The losses were between -1.59% and continued all the way down to -7.95%. The least down was the Dow Jones Utility Index while the most down was Russell 2000.
This table is showing serious deterioration. Regarding trend, the only symbol with an upwards sloping 40-week moving average is the Dow Jones Utility Index. We see 3 symbols registering a 3, meaning the 40-week moving average is sloping down. The momentum condition of the table looks less bad than the trend, but that is deceptive because the PPO Oscillator lines for IJH and IJR are just above 0 by and pointing straight down just barely above their 0 lines.
Last week, on average, the universe was below its 52-week high by 6.27%, but this week it has moved down to 11.59% below its 52-week high. Last week, on average, the universe was above its 52-week low was 21.18%, while this week is only 14.56%. We also have a large increase in symbols making new lows. We have 1 symbol making a monthly closing low, 6 symbols making quarterly closing lows, and 1 symbol making a 52-week closing low.
Summary table. Sorted by the year-to-date rate-of-change.
Here is the table sorted by the year-to-date performance. Again, all red. The real story is that last week the universe of symbols was, on average, down -2.57 year-to-date, while this week the average is down -8.13% year-to-date.
Relative Comparison Chart. This shows the year-to-date performance.
Here is the year-to-date performance in a more visual format. Last week it was the S&P small caps that held the title of best performer year-to-date. This week the Dow Jones Utility Average has taken that role, while the Dow Jones Industrial Average hung on to 2nd place. The S&P mid-caps have given up third place to the Dow Jones Transportation Index. Spy retains 4th place.
The U.S. Landscape Charts
QQQ: The Nasdaq 100 ETF
Last week we had that spinning top candle sitting above the 40-week simple moving average with momentum respecting its downward sloping trendline. This week we see a large marabozu candle, closing right on its lows, with momentum breaking below its trendline on larger than average volume. Price is still above last October’s swing low of $350, but down 14% from its high. If $350 fails we can look to $316 which also is the 38.2% Fibonacci retracement from the March 2020 low to the November 2021 high.
Standard & Poor’s ETFs
SPY: The S&P 500 ETF
Last week we had that spinning top candle sitting above the 40-week simple moving average with momentum respecting its downward sloping trendline. This week we see a large marabozu candle, closing right on its lows, with momentum failing to get above its downward sloping trendle on larger than average volume. Price is still above last October’s swing low of $426. Price is down less than 9% from its high. If $426 fails, we can look to $40.67 as potential gap support.
IJH: The S&P 400 ETF
Last week’s doji was sitting above the 40-week simple moving average with momentum respecting its downward sloping trendline. This week we see a large marabozu candle, closing right on its lows, with momentum failing to get above its downward sloping trendle on larger than average volume. Price has fallen below its 40-week simple moving average which is now sloping downward. Momentum has failed to get above its downward sloping trendline. The oscillator is very close to crossing below 0 which would indicate a negative momentum condition. Price is still above last July’s swing low of $254.20. Price is down about -11.5% from its high. If $254 fails, we can look to $224 which is the 38.2% Fibonacci retracement and then $204 is the 50% level of the move from the March 2020 low to the November 2021 high.
IJR: The S&P 600 ETF.
Last week’s spinning top was sitting above the 40-week simple moving average with momentum flat. This week we see a large marabozu candle, closing right on its lows, with momentum failing on larger than average volume. Price has fallen below its 40-week simple moving average which is now sloping downwards. The momentum oscillator is very close to crossing below 0 which would indicate a negative momentum condition. Price is still above last July’s swing low of $102.50. Price is down about -13.75% from its high. If $102.50 fails, we can look to $93 which is the 38.2% Fibonacci retracement and then $84.50 is the 50% level of the move from the March 2020 low to the November 2021 high.
The Russell ETFs
IWB: The Russell 1000 ETF.
Last week’s spinning top was sitting above the 40-week simple moving average with momentum trending down, but still positive. This week we see a large marabozu candle, closing right on its lows. Price has fallen below its 40-week simple moving average. Price is still above last October’s swing low of $237. Price is down just over -9.% from its last high on the week ending December 31st, 2021. If $37 fails, we can look to $210.
IWM: The Russell 2000 ETF.
IWM is the symbol with the most red-flags as of now. It closed at a 52-week low, is in a quantitative downtrend with price below its downward sloping 40-week simple moving average, and has quantitatively negative momentum with the PPO Oscillator line below 0 and a negative histogram. IWM is also over 19% from its last all-time closing high which was made in mid-November 2021. The next level to watch is $191 and then potential gap support at 165.71.
Dow Jones Indices
DJT: Dow Jones Transportation Average.
Of the Dow Indices, the transports finished in the middle of the pack, down -4.73% last week. Price is breaking below a flat 40-week simple moving average with a large marabozu candle closing on its low. Momentum is declining but still positive. The next level we are watching is 13,946.50 which mark the late-September/early-November 2021 swing lows. Price is roughly 16.5% below its highs and made 13-week closing low.
DJI: Dow Jones Industrial Average.
The industrial average was the weakest of the three Dow Indices, down more than -5% last week. Price is breaking below a flat 40-week simple moving average with a large marabozu candle closing on its low. Momentum is declining but still positive. If price fails at 33,515, below it we have 29,8000 which marks the January 2021 swing lows and the 38.2% Fibonacci retracement from the March 2020 lows to the January 2022 highs. Price roughly 7% from its highs and made a 21-day swing low.
DJU: Down Jones Utility Average.
The Utility Index was the symbol that was down the least of our entire 9 symbol universe at -1.59%. It is also the only symbol that has a quantitatively positive trend and momentum condition. It is also the only symbol not making a new swing low. 4 weeks from its last 52-week closing high, price formed a spinning top candle. We are looking for a resumption of the uptrend or the 40-week simple moving average to hold as support around $918.
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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