Who Is Swimming In opposition to The Tide? | ChartWatchers

The Relative Rotation Graph above exhibits the members of the DJ Industrials index in opposition to $ONE because the benchmark. This manner of RRG helps us to gauge the value tendencies inside the universe. You’ll be able to see fairly clearly that almost all of the tails are contained in the lagging quadrant, with just a few inside weakening and heading in the direction of lagging.

Of the tails which are inside main, just a few are shifting at a optimistic RRG-Heading. Of the tails inside lagging, fairly just a few are selecting up on the vertical JdK RS-Momentum axis however not (but) on the RS-Ratio axis. This implies that these strikes are extra recoveries inside the current downtrends than reversals of these tendencies.

This studying will get help from the every day RRG

Right here we see an entire cluster of tails inside main and weakening, just about all at a detrimental RRG-Heading. It is the optimistic rotation that this group went via over the previous 2-3 weeks which pushed the weekly tails up on the RS-Momentum scale. The weak spot that’s now setting in on the every day RRG means that this current rally is now ending.

The truth that the overall tendency of tails on each RRGs is weak makes it laborious to name a bull marketplace for the DJ industrials index itself.

A fast have a look at the weekly chart of $INDU above reveals that, because the begin of this yr, the lows are coming in at decrease ranges whereas the highs are additionally coming in at decrease ranges. This defines a down-trend.

I’m penning this on Friday earlier than the shut, so issues have nonetheless just a few hours to vary, however I would be fairly shocked if the market would handle to take out the 35.4k excessive that was set final week. When the market closes at or round present ranges, that 35.4k peak will change into a confirmed decrease excessive.

But in addition merely evaluating the habits on this chart because the begin of 2022 with the habits since mid-2020, it is fairly secure to conclude that this isn’t a really sturdy chart anymore. There’s sufficient technical proof that one ought to not less than be utilizing a cautious strategy to placing on new lengthy positions.

Not All Pigs Are Equal..

Shopping via the tails on the weekly RRG., I recognized solely 5 shares which are on a optimistic RRG-Heading (0-90 levels). These are proven within the plot above. The 2 that actually stand out in a optimistic manner are WMT and JNJ.

JNJ – Johnson & Johnson

After a consolidation that took a few yr, JNJ is now breaking away from that buying and selling vary, which opens up a number of new upside potential for this inventory. Throughout the Dow Jones Industrials index, this could possibly be one of many few fish that’s making an attempt to swim in opposition to the tide.

WMT – Walmart

For WMT, the image is kind of related. The consolidation took even longer, however the upward break of this week takes WMT convincingly out of its buying and selling vary which, identical to JNJ, opens up a number of contemporary upward potential for the inventory.

For each names, the draw back is nicely protected by the higher boundary of the previous buying and selling vary, which ought to begin to act as help in case of a setback providing a very good threat/reward ratio.

Have an incredible weekend and #StaySafe, –Julius

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