One week into 2022 & its already been a hell of a time.
Broader indexes are already having difficulties in the new year, as investors try to make sense of what the Fed’s policies for the year & how that will impact inflation & investing strategies, all while trying to understand what Omicron’s impact on life will be.
QQQ, an ETF that tracks the NASDAQ is down 5.4% in the first days of trading, while SPY, an ETF that tracks the S&P 500 is down 2.6% for the same period.
It’s still awfully early on in the year to be making major assumptions & expectations, but the technicals on the charts signal that there will be more volatility & moves downward this year, with the last week only being a taste of what’s to come.
Regional Banks (DPST), Natural Gas (FCG), Peruvian Equities (EPU) & Consumer Staples (XLP) All Are Performing Well On Strength
Regional Banks have had quite the turnaround since July of 2021.
DPST, the Direxion Daily Regional Banks Bull 3X Shares ETF has nearly doubled in price since then.
While their moving averages look appealing, I may keep an eye on DPST’s RSI, which is in overbought territory, as well as the angle of their MACD.
This may be an opportunity for beginning or adding to an existing position coming in the near-term as it begins to establish a new price range.
FCG ETF, which is the First Trust Natural Gas ETF has also rebounded from the troubles that it saw in July.
With their RSI back around 60 & a bullish MACD, there may be more momentum to power through the $19.38-level, which was their high from November 2021.
FCG’s technical growth over the last year has looked very consistent though.
EPU, an ETF that tracks Peruvian Equities has also been performing very well recently, reversing a months-long slide in August to recover most of its lost gains.
Their RSI is a bit rich at 76.5, which may lead to entry-points for new position or adding to existing positions as it begins to establish a new range after a period of high price growth.
How consistent their volume remains will be key in determining this, with positive, above average volumes being better than weaker volume & limited price movement.
XLP ETF tracks consumer staples stocks, and has also had a very strong performance this year.
XLP’s recent volume has been stronger than the year’s average & with a bearish MACD crossover taking place there may be some weakness to buy into in the near future as their RSI cools off from overbought levels.
Cannabis (TOKE), Moonshot Innovators (MOON), Gig Economy (GIGE) & China (PGJ) ETFs Are All Bearish Laggards
TOKE, the Cambria Cannabis ETF has had a tough 2021, losing over half of its price since February of last year.
While TOKE’s MACD trend looks like it could cross bearish soon, their RSI implies that there should be more strength to come.
Looking at their near & mid term moving averages, this could be ripe to reverse course in 2022.
MOON, an ETF that tracks moonshot innovators & related companies has also had a poor year.
Unfortunately, that looks to get worse in 2022 when we consider the rate hike path that so far has speculated 2-4+ hikes in interest rates this year.
RSI is oversold, but MACD implies more falling to come & their moving averages don’t seem to offer much help.
On less than average volume, this one may not be worth looking too deeply at just yet for a turnaround.
GIGE, an ETF that is tracking the Gig Economy has seen a steady falling since mid-February of 2021.
This is another one that you may want to sit tight on trying to find the bottom, as there isn’t much signaling that the losses are done just yet.
They’ve already gone into oversold RSI territory & continued to fall, so this one looks best to wait on trying to build a position.
Lastly, we look at PGJ, an ETF that tracks companies that receive large portions of their revenues from business with China.
PGJ looks to be trying to establish a bottom as we enter a new year, based on the 2021 lows.
With their 10 Day Moving Average & price even when I took the above screenshot, it is a step in the right direction.
A word of caution though, is their RSI is back up to almost 43 & trading volumes have been well above average recently.
People seem to be finding consensus that the past month’s range seems like fair pricing, but with so many variables at play it is tough to guess what’ll happen next week.
Tying It All Together
All-in-all there looks to be an exciting week ahead in the markets as we rumble into the 2022 trading year.
It’ll be interesting to see how data reported this week compares to previous periods, as there still seem to be a variety of responses by governments & businesses to omicron.
Inflation & supply chain issues are also another area of interest, as again these seem to vary greatly based on locations, both in the US & abroad.
Of course the question that is on all of our minds is, looking at the current technical status of the major indexes, when is the rug finally going to get pulled out from under this market?
*** I DO NOT OWN SHARES OF ANY TICKER MENTIONED IN THIS ARTICLE, WITH THE EXCEPTION OF A SMALL POSITION IN TOKE***