Learnings and conclusions from this week’s charts: $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $Dow Jones(.DJI)$ $iShares Russell 2000 ETF(IWM)$
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The equal-weighted S&P500 continues to make new highs.
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The cap-weighted S&P500 remains stuck (thanks to “lag-7”).
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The S&P500 Value index also chalked up new highs last week.
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Micro caps and financials are putting in promising price action.
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The USA, Korea, and China have one bubbly thing in common.
Overall, the bull-market-broadening and bullish rotation theme continues to play through, with the old leaders lagging, and everything else starting pick up. This is a constructive development, but there are a few things to keep an eye on…
1. Bull Market Broadening:
the bullish broadening theme continues to play out. Below you can see the SPXEW (equal-weighted S&P500) making a strong push higher, while the cap-weighted S&P500 is still stuck in consolidation mode. Meanwhile 200-day moving average breadth continues to trend higher.
2. Lag-7:
meanwhile the Mag-7 continue to lag behind vs the S&P493.
3. Equal vs Cap Weight:
the equal vs cap weighted S&P500 relative performance line sure is looking like it’s attempting to put a bottom in. This is a positive sign for the bullish rotation theme.
(however: coming from such a one-sided market, the risk is you get a situation like 2000 where equal-weight outperforms by falling less when the previous leaders come unstuck; i.e. a bearish rotation)
4. Value vs Growth:
there are also (albeit less convincing) signs that the value vs growth relative performance line is also attempting to turn.
5. Value ATH:
and on that note, the S&P500 Value index just quietly made a new all-time high last week (whereas the S&P500 Growth index peaked a month ago).
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