Weekly Preview >APR 18 2022<
Notable Events on our Weekly Watchlist:
Monday: BAC Earnings
Tuesday: NFLX, IBM Earnings
Wednesday: Existing Home Sales, LRCX, TSLA Earnings
Thursday: AAL Earnings, Jobless Claims
Friday: None
Expect to see consolidation in SPY on Monday and Tuesday followed by volatility Wednesday and Thursday on earnings reaction.
SPY Technical Analysis
SPY is sitting in the middle of it's risk range, with support at 428.96 at the technical channel and 447.36 at S1 pivot.
With the Overbought/Oversold oscilator at 52, it is neither overbought nor oversold.
Correlation Screener
According to our Correlation Screener, XLY, XTN and XLK are the ETFs most subjected to price swings on the sectors front, while almost all style ETFs will be significantly affected by this week's earnings (especially SPY and MTUM).
What stands out to me is the fact that these sectors are under a lot of pressure right now, posting negative 6mo excess returns vs SPY and trading at the lower end of their technical channels.
Sectors Analysis and Positioning
Asset Class Overview
From an asset class perspective, equities are struggling, gold seems on a cusp of a breakout, commodities surge and long-term treasuries are un-investible. I expect positive earnings to reverse trends in TLT and SPY, while negative earnings would just amplify current conditions.
Market Internals Observations
Volume
On the market internals part, I would like to see dollar volume pick up from these levels in order to confirm any market direction. The recent surge in volatility is unmistakable however, and does not look good in light of thin volume (illiquid conditions).
Drawdown Time
At 71 days, the current drawdown duration of the market is the highest of the past 2 years. It took less time for the market to recover after the Covid crash of 2020.