Market review 23.05.28

A new leadership ranking chart, and more.

Hello everyone,

If you are a member of StockCharts.com, I highly recommend that you check out their articles page. They have a team of respected technicians that each provide a weekly review of markets in their unique style. My favorites are John Murphy and Martin Pring. These legends have been studying markets for over 50 years and have written two of the top books you can find on technical analysis.

John Murphy – considered the father of inter-market analysis – begins his latest post like this:

“TALE OF TWO MARKETS... Previous messages have pointed out the growing gap between rising technology stocks and the rest of the market. That gap widened even further this week.”

This behavior, as well as its reasoning, is what I’ve been highlighting since March. Last week I ended my blog post with this:

“Can this highly bifurcated market continue to produce significant gains for growth stocks while commodities and specific value segments decline? Does this go too far and lead to a rotation, as suggested by positioning data? The answer to both could be yes.”

As John said, the gap between leaders and laggards widened this week.

I’ll expand on this today by starting with an overall view of market leadership (here, I’ll introduce a new chart I developed based on John Murphy’s work), then go over price charts for individual sectors and asset classes. I’ll also discuss some portfolio trades.

Let’s dive in.

A new leadership chart

By now, you’re all very familiar with my ETF leadership board:

This chart shows 52-week highs and lows for roughly 80 ETFs. I developed it three years ago, and it hasn’t changed much apart from changes in the ETF universe. This chart has served me well to quickly assess the inter-market and align myself with market forces.

This week, I created a new companion leadership chart I had been thinking about for a while.