• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Surge In TSLA And Strong AMZN Is Not Enough
Stock

Surge In TSLA And Strong AMZN Is Not Enough

by May 24, 2024
by May 24, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Concerns Remain

My concerns about current market developments, which I voiced in last week’s article, are still valid. The current sector rotation, as it is visible on the relative rotation graph above, is not supportive of a strong rise in the S&P 500

The strong headings, especially for the tails of XLU and XLP, suggest that the rotation to defensive sectors is ongoing. The pickup of relative momentum in the healthcare sector (XLV) adds to that observation.

Another tail, which is not in line with a strong bull market in $SPX, is XLY, inside the lagging quadrant and traveling lower on the JdK RS-Ratio scale at a negative rg heading.

AMZN & TSLA Are Not Able To Pull The Sector Up

An interesting observation about the rotation of the consumer discretionary sector is that only two stocks—Amazon and Tesla—make up a large part of it. Together, they represent roughly 38% of the sector’s total market capitalization. Where you usually see a huge impact of a few mega-/large-cap stocks on the direction of the sector as a whole, that is not the case here.

Both stocks outperformed the Consumer Discretionary Index, showing positive returns, over the past 5 weeks while XLY was underperforming SPY.

Both stocks Are at different locations on the RRG, but both contribute positively. Amazon shows a very short tail and has just crossed from the leading quadrant into weakening. Its short tail indicates that this stock is in a stable relative uptrend. On the other hand, Tesla shows a longer tail and is moving from the lagging quadrant into improving on a positive rrg heading.

The performance table, which you can find below the relative rotation graph, highlights the differences in performance for the two stocks versus the consumer discretionary sector index. Tesla rose almost 22%, and Amazon added 4.2% over the last five weeks, while XLY only gained 3.5 percent. I have added SPY as a reference, which showed a performance of almost 7% over the same period.

So what does it mean when a large sector like consumer discretionary is underperforming the SMP500 while 1/3 of its market capitalization is outperforming the sector?

This means that under the hood, the situation for the sector as a whole is even worse.

This can be visualized by using the equal-weight sector rotation instead of the cap-weighted sector rotation.

The RRG above shows the tails for both XLY and RSPD using SPY as the benchmark. Both are well inside the lagging quadrant, but note the steepness of the tail for RSPD and its length compared to XLY.

Despite the lower reading on the RS-ratio scale for RSPD, the longer tail and the lower reading on the RS-momentum scale suggest that more relative downside is underway.

So far AMZN and TSLA have not been able to turn this situation around on a sector level.

Only Large Cap Growth

The last observation I want to share with you for this article is the difference in rotation between large-, mid-, and small-cap stocks across both the value and growth segments.

In the RRG above, we see large-cap growth as the only sector on a positive RRG-Heading, and inside, the weakening quadrant is on its way back toward the leading quadrant. This rotation suggests a new up-leg in an already established relative uptrend is underway.

ALL other tails are rolling over and rotating toward the lagging quadrant or already in there.

This means that the current market strength is mainly driven by the large-cap growth segment, which includes NYFANG+ and MAG7 stocks that have a huge impact on the performance of $SPX.

So far, it’s working out alright, but for how long? As always, this discrepancy can resolve itself in two ways: either by the $SPX dropping in price to get back in line with the more defensive rotation or, and that is also a very possible scenario, a prolonged sideways move to digest recent gains.

Or by the sector rotation moving toward more offensive sectors and mid- and small-cap segments, joining their large-cap counterparts in more positive territory on the RRG.

#StayAlert and have a great weekend. –Julius

Please note: Sector Spotlight has been discontinued, but I am back on the StockCharts.com YouTube channel with a weekly show, usually on Mondays.

You Might Also Like
  • Week Ahead: Markets’ Reaction to Exit Poll and General Election Results
  • The Fed Talked, The Market Reacted. Think Value.
  • Gold Rushed by a Wave of Economic Data
  • MEM TV: An Exciting New Area Joins the Market’s Uptrend
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Dow Theory Flashes Bear Signal
next post
State Department re-issues dire ‘Do Not Travel’ warning for Venezuela

You may also like

UTILITIES TRYING TO “POWER” UP EQUITY MARKETS

June 3, 2024

MEM TV: The Easy Way to Uncover Stocks Poised to...

January 13, 2024

GNG TV: Charts Telling the Story of the Markets

March 30, 2023

Biotechnology on Drugs

August 22, 2023

Time for Sweet Talk: Sugar Futures

January 23, 2024

Oh Boy… Here Comes the Pullback!

August 4, 2023

EQUITIES STRUGGLE AS MORE SECTORS TRY TO KEEP THE TREND...

July 29, 2024

Buoyant Technical Setup In This CV Stock

February 3, 2023

How To Profit From Bullish Gap-Down Reversals

March 16, 2024

Coinbase’s Stock Price Could See a Sizable Move: Time to...

November 28, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025
    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    US Sectors Soar to New Highs!

    October 1, 2024

    Stocks In Focus: Three Charts to...

    March 28, 2025

    Sector Spotlight: Big Bases in Technology...

    May 23, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here