The Market's Compass US Index and Sector ETF Study
Week #169
Welcome to The Market’s Compass US Index and Sector ETF Study, Week #522*. As always it highlights the technical changes of the 30 US Index and Sector ETFs that I track on a weekly basis and normally publish every third week. Past publications can be accessed by paid subscribers via The Market’s Compass Substack Blog.
*In observence of Christmas, Hanukkah, and New Years holiday this week’s complete Market’s Compass U.S. Index and Sector ETF Study will be the final Study for 2024. Many thanks to all subscribers, paid and free, for your attention and feedback to my technical observations on the US Index and Sector ETF markets through out 2024. Today’s study will be sent to all subscribers, Happy Holidays!
Regular readers will note that I have removed the repetitive explanations of my proprietary indicators. As will be seen below they can be reviewed on The Market’s Compass website.
This Week’s and 8 Week Trailing Technical Rankings of the 30 Individual U.S. Index and Sector ETFs
To understand the methodology used in constructing the objective U.S. Index and Sector ETF Individual Technical Rankings visit the MC’s Technical Indicators page at www.themarketscompass.com and go to “us etfs”.
The Total ETF Ranking or “TER”, fell -24.16% last week to 601 from 792.5 the week before. Four weeks ago, the TER registered the best level since March 29th reading of 1,215 and as will be seen later is this week’s Study despite reaching an overbought condition the TER finally confirmed the record weekly closing November 29th high. It has fallen the past three weeks
At the end of last week, Twenty-nine ETFs registered losses in their TRs, and one was unchanged. Eight ETFs registered double-digit TR losses. At the end of the week only four of the ETF TRs were in the “green zone” (TRs between 35-50), thirteen ETF TRs were in the “blue zone” (TRs from 15.5 -34.5), and thirteen ended in the “red zone” (TRs between 0-15) versus the week before when there were ten in the “green zone”, eleven were in the “blue zone”, and nine were in the “red zone” (TRs between 0-15). Last week marked a deterioration in individual TRs week over week.
The Technical Condition Factor* Changes over the past week and previous 8 weeks
*To understand the construction the of The Technical Condition Factors visit the MC’s Technical Indicators page at www.themarketscompass.com and go to “us etfs”.
One technical takeaway would be if the DMC Factor or DMCTF rises to an extreme between 85% and 100% it would suggest a short-term overbought condition. Conversely a reading in the range of 0% to 15% would suggest an oversold condition was developing. This past week a reading of 9.52% was registered in the DMCTF or 20 out of a possible total of 210 positive points which left the DMCTF in oversold territory
As a confirmation tool, if all eight TCFs improve on a week over week basis, more of the 30 ETFs are improving internally on a technical basis confirming a broader market move higher (think of an advance/decline calculation). Conversely if all eight TCFs fell over the week it confirms a move lower in the broader market. Last week seven TCFs registered losses and one was unchanged helping to confirm the selloff in the broader market.
The SPX Index with the Total ETF Technical Ranking, “TER”, Overlaid
An explanation of the The Total ETF Technical Ranking Indicator visit the MC’s Technical Indicators page at www.themarketscompass.com and go to “us etfs”.
Before the precipitous drop in the TER over the past three weeks, the TER edged out a confirming high vs. December 6th closing price high but the 13-Week Exponential Moving Average failed to do so and has been tracking lower since.
The Weekly Candlestick and Cloud Chart with The Average Technical Ranking of the 30 US Index and Sector ETFs
The Weekly Average Technical Ranking (“ATR”) is the average Technical Ranking of the 30 US Index and Sector ETFs we track. Like the TER, it is a confirmation/divergence or overbought/oversold indicator.
Unsurprisingly, after reaching an overbought extreme (as did the TER) the ATR has fallen sharply thorough both moving averages and now has reached an oversold condition. The one positive technical feature is that the large cap index held support offered by the Median Line (red dotted line) of the Standard Pitchfork (red P1 through P3) on an intra-week basis. That said Weekly MACD is only another bad week away from violating its signal line. More in “Thoughts on the short-term technical condition of the SPX Index” but first…
The Weekly Absolute and Relative Price % Change*
*Does not include potential dividends
All thirty US ETFs we track in this blog lost ground on an absolute basis last week. The average absolute loss last week was -4.12%, adding to the average absolute loss -2.03% the week before. Only five ETFs outperformed the -1.99% loss in the S&P 500 Index on a relative basis and twenty-five underperformed.
Thoughts on the short-term technical condition of the SPX Index
Last Wednesday the S&P 500 Index sliced through support at the Lower Parallel (solid red line) of the Schiff Modified Pitchfork (red P1 through P3) and although on an intra-day basis it traded back above it, it was capped at the broken Kijun Plot and on Friday the large-cap index closed below it. My Daily Momentum / Breadth Oscillator has reached an oversold condition that may lead to a further reactionary price bounce. That said, the momentum oscillators do not suggest anything more than that.
Relative Return vs. The SPX Index Since January 1st
For readers who are unfamiliar with the technical terms or tools referred to in the comments on the technical condition of the SPX can avail themselves of a brief tutorial titled, Tools of Technical Analysis.
Charts are courtesy of Optuma whose charting software allows the Technical Rankings to be calculated and back tested.
To receive a 30-day trial of Optuma charting software go to…