Weekend Video – 5/200 Cross Flips CBM, Breadth Deteriorates Further, Spreads Widen, Commodities Lead, Techs Get Slammed (Premium)

The stock market is as divided as ever with the pockets of weakness at the risk-on end. Risk-off ETFs and commodity-related ETFs are performing the best right now. Finance-related ETFs are also holding their own as the 10-yr Treasury Yield exceeds 2%. There are some

The Composite Breadth Model is net bullish because the 5-day SMA for the S&P 500 is above the 200-day SMA. Even so, some 55% of S&P 500 stocks are below their 200-day SMAs and fewer than 40% of mid-caps and small-caps are above their 200-day SMAs. There are more long-term downtrends than

February is the month of the big bounce. As is normal after a big decline, names that led the way lower and fell the most are getting the biggest bounces. Most of the ETFs with the biggest bounces were in downtrends already and these are still considered oversold bounces within downtrends.

Strength within the S&P 500 flipped the Composite Breadth Model bullish this week, but the %Above 200-day SMA and High-Low Percent indicators show more pockets of weakness than strength in the broader market (S&P 1500). The Trend Composite is bearish for all

Small-caps were the talk of the town in mid November as they broke out of a seven month range and the skies opened up. Volatility then reared its ugly head in late November when the Russell 2000 ETF (IWM) fell some 12 percent from a new high. IWM continued lower in January and hit a 52-week low. The Russell 2000 Growth ETF (IWO) led the way as money fled high-beta stocks and ETFs.

January was a rough month for stocks so far as QQQ fell 11.6% and IWM fell 12.2%. SPY and the S&P 500 EW ETF (RSP) held up much better with declines of around 6%. Again, we are seeing more weakness in mid-caps, small-caps

There were lots of downtrend signals this past week and over the past month. Selling pressure expanded and broadening participation on the downside was enough to push the Composite Breadth Model back into bear market mode. Note that I will update the Market Regime page on Friday morning. For now, the pickings are slim among the equity-related ETFs

The Composite Breadth Model has yet to trigger bearish as stocks recovered on Monday and closed strong. Despite this reversal, the technical damage has already been done to several big sectors and key industry group ETFs. Even so, the S&P 500 EW ETF (RSP) managed to hold its

The S&P 500 fell 5.75% this week and this as the biggest weekly decline since March 2020 (covid crash). It was the second biggest weekly decline since October 2020 (5.6%). Declines like this are normally associated with a selling climax that could give way to a short-term oversold bounce. Longer-term, however,

Stocks continued their recent ways with small-caps (IWM) and high-beta tech stocks (QQQJ) leading the way lower in January. IWM is down around 8% year-to-date and QQQJ is down around 11%. The year is starting just how it ended: growth and high beta remain out

Last Tuesday, I wrote about the transition phase currently underway in the markets. Actually, there are a number of transitions underway and perhaps they are linked. While I do not like to dive deep into the fundamentals, the macro backdrop for 2022 is looking very different from 2020 to 2021.

The weight of the evidence is bullish for the broader market, but there are some sizable pockets of weakness, as seen when looking at the percentage of stocks above the 200-day SMA for the various indexes. Yield spreads show no signs of stress and the Fed Balance sheet is

The transition process is difficult and the markets are undergoing a transition from a covid-driven economy to a normal economy. A covid economy implies Fed easing, fiscal stimulus and falling Treasury yields. A normal economy means no more balance sheet expansion, no more fiscal stimulus and a normalization of Treasury yields.